EMMAUS LIFE SCIENCES, INC. (Form: 10-Q, Received: 08/19/2016 15:43:50)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 000-53072

EMMAUS LIFE SCIENCES, INC.

(Exact name of Registrant as specified in its charter)

Delaware		41-2254389
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

21250 Hawthorne Boulevard, Suite 800, Torrance, California		90503
(Address of principal executive offices)		(Zip code)

(310) 214-0065

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The registrant had 28,598,677 shares of common stock, par value $0.001 per share, outstanding as of August 12, 2016.

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EMMAUS LIFE SCIENCES, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2016

IN DEX

				Page
Part I	Financial Information

	Item 1.	Financial Statements

		(a)	Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015	1

		(b)	Consolidated Statements of Comprehensive Loss for the Three and Six months ended June 30, 2016 and 2015 (Unaudited)	2

		(c)	Consolidated Statement of Changes in Stockholders’ Deficit for the Six months ended June 30, 2016 (Unaudited)	3

		(d)	Consolidated Statements of Cash Flows for the Six months ended June 30, 2016 and 2015 (Unaudited)	4

		(e)	Notes to Consolidated Financial Statements as of and for the Six months ended June 30, 2016 (Unaudited)	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28

	Item 4.	Controls and Procedures		28

Part II	Other Information

	Item 1.	Legal Proceedings		30

	Item 1A.	Risk Factors		30

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30

	Item 3.	Defaults Upon Senior Securities		31

	Item 4.	Mine Safety Disclosures		31

	Item 5.	Other Information		31

	Item 6.	Exhibits		32

Signatures				33

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Item 1. Financial Statements

EMMAUS LIFE SCIENCES, INC.

CONSOLIDATED BALANCE SHEETS

	As of
	June 30, 2016			December 31, 2015
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	322,887		$	472,341
Accounts receivable	54,138			101,639
Inventories, net	241,618			219,163
Marketable securities, pledged to creditor	218,230			219,015
Prepaid expenses and other current assets	109,114			131,113
Total current assets	945,987			1,143,271

PROPERTY AND EQUIPMENT, Net	53,911			58,227

OTHER ASSETS
Deposits	263,585			275,500
Total other assets	263,585			275,500
Total Assets	$	1,263,483		$	1,476,998

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	4,253,590		$	3,780,494
Other current liability	33,331			88,331
Notes payable, net	6,368,191			4,656,749
Notes payable to related parties, net	3,291,838			2,766,304
Convertible notes payable, net	6,339,420			6,000,347
Convertible notes payable to related parties, net	254,000			298,000
Total current liabilities	20,540,370			17,590,225

LONG-TERM LIABILITIES
Deferred rent	59,209			59,886
Warrant derivative liabilities	7,911,000			7,863,000
Convertible notes payable, net	4,106,808			4,206,873
Convertible notes payable to related parties, net	320,000			320,000
Total long-term liabilities	12,397,017			12,449,759
Total Liabilities	32,937,387			30,039,984

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Preferred stock — par value $0.001 per share, 20,000,000 shares authorized, none issued and outstanding	—			—
Common stock — par value $0.001 per share, 100,000,000 shares authorized, 28,565,344 and 28,163,478 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	28,565			28,163
Additional paid-in capital	60,973,203			56,508,984
Accumulated other comprehensive loss	(291,496		)	(318,324		)
Accumulated deficit	(92,384,176		)	(84,781,809		)
Total Stockholders’ Deficit	(31,673,904		)	(28,562,986		)
Total Liabilities & Stockholders’ Deficit	$	1,263,483		$	1,476,998

The accompanying notes are an integral part of these consolidated financial statements.

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EMMAUS LIFE SCIENCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015

REVENUES, net	$	172,681		$	144,336		$	252,080		$	241,095

COST OF GOODS SOLD	83,006			63,669			111,072			113,659
GROSS PROFIT	89,675			80,667			141,008			127,436

OPERATING EXPENSES
Research and development	584,695			303,007			1,086,996			547,125
Selling	85,054			88,336			178,634			245,522
General and administrative	2,255,506			2,358,537			4,548,428			5,212,879
	2,925,255			2,749,880			5,814,058			6,005,526

LOSS FROM OPERATIONS	(2,835,580		)	(2,669,213		)	(5,673,050		)	(5,878,090		)

OTHER INCOME (EXPENSE)
Gain on derecognition of amounts due to related party and settlement of litigation	—			418,366			—			418,366
Change in fair value of liability classified warrants	—			475,000			—			661,000
Change in fair value of warrant derivative liabilities	806,110			940,000			(56,890		)	1,322,000
Interest and other income (loss)	(33,640		)	38,643			(59,472		)	82,181
Interest expense	(1,079,353		)	(858,002		)	(1,810,555		)	(1,502,499		)
	(306,883		)	1,014,007			(1,926,917		)	981,048

LOSS BEFORE INCOME TAXES	(3,142,463		)	(1,655,206		)	(7,599,967		)	(4,897,042		)
INCOME TAXES	—			—			2,400			2,200
NET LOSS	(3,142,463		)	(1,655,206		)	(7,602,367		)	(4,899,242		)

COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS )
Unrealized holding loss on securities available-for-sale	(26,690		)	(9,319		)	(785		)	(142,345		)
Unrealized foreign currency translation	16,609			(2,890		)	27,613			(1,975		)
	(10,081		)	(12,209		)	26,828			(144,320		)
COMPREHENSIVE LOSS	$	(3,152,544	)	$	(1,667,415	)	$	(7,575,539	)	$	(5,043,562	)
NET LOSS PER COMMON SHARE	$	(0.11	)	$	(0.06	)	$	(0.27	)	$	(0.16	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	28,564,216			29,015,561			28,515,007			29,794,041

The accompanying notes are an integral part of these consolidated financial statements.

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EMMAUS LIFE SCIENCES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED JUNE 30, 2016

(UNAUDITED)

	Common stock — par value $0.001 per share, 100,000,000 shares authorized			Additional			Accumulated Other
	Shares	Common Stock		Paid-in Capital			Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Deficit

Balance, December 31, 2015	28,163,478	$	28,163	$	56,508,984		$	(318,324	)	$	(84,781,809	)	$	(28,562,986	)
Stock issued for cash	400,000	400		1,799,599			—			—			1,799,999
Warrants issued in conjunction with convertible and non-convertible promissory notes	—	—		597,039			—			—			597,039
Beneficial conversion feature relating to convertible and promissory notes payable	—	—		1,092,378			—			—			1,092,378
Share-based compensation	—	—		975,205			—			—			975,205
Exercise of common stock options (cashless)	1,866	2		(2		)	—			—			—
Unrealized loss on marketable securities, net of tax	—	—		—			(785		)	—			(785		)
Foreign currency translation effect	—	—		—			27,613			—			27,613
Net loss	—	—		—			—			(7,602,367		)	(7,602,367		)

Balance, June 30, 2016	28,565,344	28,565		60,973,203			(291,496		)	(92,384,176		)	(31,673,904		)

The accompanying notes are an integral part of these consolidated financial statements.

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EMMAUS LIFE SCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six months ended June 30,
	2016			2015

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(7,602,367	)	$	(4,899,242	)
Adjustments to reconcile net loss to net cash flows used in operating activities
Depreciation and amortization	7,402			118,115
Amortization of discount of convertible and promissory notes	771,704			798,020
Foreign exchange adjustments on convertible notes and notes payable	339,206			(46,935		)
Gain on settlement of litigation	—			(418,366		)
Share-based compensation	975,205			2,161,441
Change in fair value of liability classified warrants	—			(661,000		)
Change in fair value of warrant derivative liabilities	56,890			(1,322,000		)
Net changes in operating assets and liabilities
Accounts receivable	52,356			20,979
Inventories	(14,323		)	25,958
Prepaid expenses and other current assets	82,122			(77,481		)
Deposits	16,859			30,696
Accounts payable and accrued expenses	940,127			(27,772		)
Other current liability	(55,000		)	—
Deferred rent	(864		)	59,552
Net cash flows used in operating activities	(4,430,683		)	(4,238,035		)

CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of property and equipment	(1,897		)	(2,334		)
Net cash flows used in investing activities	(1,897		)	(2,334		)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable issued	2,654,700			3,935,566
Proceeds from convertible notes payable issued	740,110			1,693,343
Payments of notes payable	(307,700		)	(230,000		)
Payments of convertible notes	(611,970		)	(225,800		)
Proceeds from exercise of warrants	—			102,885
Proceeds from issuance of common stock	1,799,999			—
Net cash flows from financing activities	4,275,139			5,275,994
Effect of exchange rate changes on cash	7,987			(10,819		)

Net increase (decrease) in cash and cash equivalents	(149,454		)	1,024,806
Cash and cash equivalents, beginning of period	472,341			556,318
Cash and cash equivalents, end of period	$	322,887		$	1,581,124

SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
Interest paid	$	473,619		$	211,839
Income taxes paid	$	2,400		$	2,200

SUPPLEMENTAL DISCLOSURES OF NON-CASH INFORMATION
Derecognition of amounts due to related party from settlement of litigation	$	—		$	394,446
Acquisition of marketable securities from settlement of litigation	$	—		$	23,920

The accompanying notes are an integral part of these consolidated financial statements.

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EMMAUS LIFE SCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2016

(UNAUDITED)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited consolidated interim financial statements of Emmaus Life Sciences, Inc. and subsidiaries (collectively, the “Company” or “Emmaus”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) on the basis that the Company will continue as a going concern. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated. The Company’s unaudited consolidated interim financial statements contain adjustments, including normal recurring accruals necessary to present fairly the Company’s consolidated financial position, results of operations, comprehensive income (loss) and cash flows. Due to the uncertainty of the Company’s ability to meet its current operating and capital expenses, there is substantial doubt about the Company’s ability to continue as a going concern, as the continuation and expansion of its business is dependent upon obtaining further financing, successful and sufficient market acceptance of its products, and finally, achieving a profitable level of operations. The consolidated interim financial statements do not include any adjustments that might result from the outcome of these uncertainties. The consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on May 20, 2016 (“Annual Report”). Interim results for the periods presented herein are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016.

The preparation of the consolidated financial statements requires the use of management estimates. Actual results could differ materially from those estimates.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Refer to the Company’s Annual Report for a summary of significant accounting policies. There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2016. Below are disclosures of certain interim balances, transactions, and significant assumptions used in computing fair value as of and for the six months ended June 30, 2016 and comparative amounts from the prior fiscal periods:

Inventories — All of the raw material purchased during the six months ended June 30, 2016 and for the year ended December 31, 2015 was from one vendor. The below table presents inventory by category:

Inventory by category	June 30, 2016		December 31, 2015
Work-in-process	$	48,312	$	45,355
Finished goods	193,306		173,808
	$	241,618	$	219,163

Advertising cost — Advertising costs are expensed as incurred. Advertising costs for the three months ended June 30, 2016 and 2015 were $11,500 and $16,972, respectively. Advertising costs for the six months ended June 30, 2016 and 2015 were $15,439 and $36,235, respectively.

Marketable securities — The Company’s marketable securities consist of 39,250 shares of CellSeed, Inc. (“CellSeed”) stock which are part of 147,100 shares acquired in January 2009 for 100,028,000 Japanese Yen (equivalent to $1,109,819), at 680 Yen per share. CellSeed’s IPO (Tokyo Stock Exchange symbol 7776) was completed on March 16, 2010. As of June 30, 2016 and December 31, 2015, the closing price per share for CellSeed was 572 Yen ($5.56) and 672 Yen ($5.58), respectively.

As of June 30, 2016, 39,250 shares of CellSeed stock are pledged to secure a $300,000 convertible note issued to Mitsubishi UFJ Capital III Limited Partnership that is due on demand and are classified as current assets, as marketable securities, pledged to creditor.

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Prepaid expenses and other current assets — Prepaid expenses and other current assets consisted of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Prepaid insurance	$	80,791	$	97,708
Other prepaid expenses and current assets	28,323		33,405
	$	109,114	$	131,113

Fair value measurements — The following table presents the activity for those items measured at fair value on a recurring basis using Level 3 inputs during the six months ended June 30, 2016 and the year ended December 31, 2015:

	Period ended
Liability Classified Warrants—Stock Purchase Warrants	June 30, 2016		December 31, 2015
Balance, beginning of period	$	—	$	3,206,000
Reclassification to warrant derivative liabilities	—		(2,545,000		)
Change in fair value included in consolidated statements of comprehensive loss	—		(661,000		)
Balance, end of period	$	—	$	—

	Period ended
Warrant Derivative Liabilities—Stock Purchase Warrants	June 30, 2016		December 31, 2015
Balance, beginning of period	$	7,863,000	$	6,520,000
Reclassification from liability classified warrants	—		2,545,000
Change in fair value included in consolidated statements of comprehensive loss	48,000		(1,202,000		)
Balance, end of period	$	7,911,000	$	7,863,000

	Period ended
Warrant Derivative Liabilities—Lender Warrants	June 30, 2016			December 31, 2015
Balance, beginning of period	$	—		$	—
Warrants issued in conjunction with secured loans	316,610			—
Change in fair value included in consolidated statements of comprehensive loss	8,890			—
Reclassified to additional paid-in capital	(325,500		)	—
Balance, end of period	$	—		$	—

The value of the liability classified warrants, the value of warrant derivative liability and the change in fair value of the liability classified warrants and warrant derivative liability were determined using a Binomial Monte-Carlo Cliquet (aka “Ratchet”) Option Pricing Model. The model is similar to traditional Black-Scholes-type option pricing models, except that the exercise price resets at certain dates in the future. T he values as of June 30, 2016, December 31, 2015 and the initial value as of September 11, 2013 were calculated based on the following assumptions:

	June 30, 2016			December 31, 2015			Initial Value
Stock price	$	5.00		$	4.70		$	3.60
Risk-free interest rate	0.61		%	1.23		%	1.72		%
Expected volatility (peer group)	61.9		%	64.10		%	72.40		%
Expected life (in years)	2.20			2.70			5.00
Number outstanding	3,320,501			3,320,501			3,320,501
Balance, end of period:
Liability classified warrants	$	—		$	—		$	7,541,000
Warrant derivative liabilities	$	7,911,000		$	7,863,000		$	—

The values of lender warrants as of June 30, 2016, May 13, 2016 and April 18, 2016 were calculated based on the following assumptions:

	June 30, 2016			May 13, 2016			April 18, 2016
Stock price	$	5.00		$	5.00		$	5.00
Risk-free interest rate	1.01		%	1.24		%	1.27		%
Expected volatility (peer group)	74.10		%	73.30		%	72.90		%
Expected life (in years)	5.00			5.13			5.20

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Debt and related party debt — The following table presents the effective interest rates on the original loan principal amount for loans originated in the respective periods that either had a beneficial conversion feature or an attached warrant:

Type of Loan	Term of Loan	Stated Annual Interest Rate		Original Loan Principal Amount		Conversion Rate	Beneficial Conversion Discount Amount		Warrants Issued with Notes	Exercise Price		Warrant FMV Discount Amount		Effective Interest Rate Including Discounts
2015 convertible notes payable	Due on demand - 2 years	10	%	$	4,051,022	$3.50- $4.50	$	1,388,201	110,417	$	4.90	$	220,071	14% - 109%
2016 convertible notes payable	Due on demand - 2 years	10	%	4,229,505		$3.50- $4.50	1,037,509		75,000	$	4.70	159,968		14% - 102%
2016 promissory notes	11.5 - 12.5 months	10	%	1,295,000		—	—		100,000	$	4.50	435,381		44%
Total				$	9,575,527		$	2,425,710	285,417			$	815,420

Related party notes are disclosed as separate line items in the Company’s balance sheet.

Net loss per share — As of June 30, 2016 and 2015, potentially dilutive securities exercisable or convertible into 14,410,498 and 12,761,655 shares of the Company’s common stock were outstanding, respectively. As the Company reported a net loss, none of the potentially dilutive securities were included in the calculation of diluted loss per share since their effect would be anti-dilutive for all periods presented.

Recent accounting pronouncements — In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The amendments applicable to the Company in this Update (1) supersede the guidance to classify equity securities, except equity method securities, with readily determinable fair values into trading or available-for-sale categories and require equity securities to be measured at fair value with changes in the fair value recognized through net income, (2) allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment, (3) require assessment for impairment of equity investments without readily determinable fair values qualitatively at each reporting period, (4) eliminate the requirement to disclose the methods and significant assumptions used in calculating the fair value of financial instruments required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (5) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (6) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements, (7) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the Update. The impact of the adoption of the amendments in this Update will depend on the amount of equity securities and financial instruments subject to the amendments in this Update held by the Company at the time of adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases . The amendments in this Update require a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with terms greater than twelve months. For leases less than twelve months, an entity is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those years, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption of the amendments in this Update on the Company’s consolidated financial position and results of operations; however, adoption of the amendments in this Update are expected to be material for most entities who have a material lease with a term of greater than twelve months.

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In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The amendments in this Update simplify the accounting for share-based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This Update is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. The Company is currently in the process of evaluating this new Update.

In April 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”). The amendments in ASU 2016-10 clarify identification of performance obligations and licensing implementation. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606: For public companies, this Update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the impact that the implementation of ASU 2016-10 will have on the Company’s financial statements.

NOTE 3 — PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

	June 30, 2016			December 31, 2015
Equipment	$	167,456		$	164,931
Leasehold improvements	31,868			30,579
Furniture and fixtures	75,124			74,682
Sub total	274,448			270,192
Less: accumulated depreciation	(220,537		)	(211,965		)
Total	$	53,911		$	58,227

During the three months ended June 30, 2016 and 2015, depreciation expense was $3,734 and $5,449, respectively. During the six months ended June 30, 2016 and 2015, depreciation expense was $7,402 and $10,972, respectively.

NOTE 4 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at:

	June 30, 2016		December 31, 2015
Accounts payable
Clinical and regulatory expenses	$	320,473	$	322,193
Legal expenses	290,053		242,384
Other vendors	1,134,818		959,333
Total accounts payable	1,745,344		1,523,910
Accrued interest payable, related parties	206,661		176,940
Accrued interest payable	1,646,991		1,586,472
Accrued expenses	362,928		201,506
Deferred salary	291,666		291,666
Total accounts payable and accrued expenses	$	4,253,590	$	3,780,494

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NOTE 5 — NOTES PAYABLE

In April and May of 2016, the Company entered into secured loan agreements, pursuant to which it borrowed an aggregate amount of $1,295,000 at a fixed interest rate of 10% per annum. These loans will mature on the earlier of the closing of a new debt financing (subject to certain exceptions, including refinancings of its outstanding convertible notes) or May 1, 2017. These loans are secured by all of the Company’s personal property and are personally guaranteed by Dr. Niihara, its CEO, and secured by certain of his real property. Furthermore, the loan agreements contain certain negative covenants that may hinder the Company’s ability to raise additional capital or might otherwise affect its liquidity, including restrictions on its ability to (1) acquire material assets outside of the ordinary course of business, (2) sell, lease, license transfer or dispose of its personal property outside of the ordinary course of business, (3) pay or declare dividends, (4) make investments in or loans to other persons, (5) redeem or repurchase its stock, (6) make deposits or investments unless they are subject to a deposit control account, (7) incur additional indebtedness other than permitted debt, (8) make payments on subordinated obligations, (9) undergo a merger, change in control or sale of a substantial portion of its assets, or (10) use loan proceeds to make payments to its affiliates. If the Company is unable to repay these loans when they become due, or if it otherwise suffers an event of default under the loan agreements, the lender may have the right to foreclose on their collateral, which could have a material and adverse effect on the Company’s business, financial condition, liquidity and operations.

In connection with these loans, the Company issued the lender warrants for the purchase of 62,500 shares of its common stock at an exercise price of the lowest of the fair market value of its common stock during the quarter ended June 30, 2016 or the lowest public sale price of its common stock during the quarter ended June 30, 2016. In addition, if these loans remain outstanding for at least 30 days during the 90-day periods ending June 30, 2016, September 30, 2016 and December 31, 2016, the Company is obligated to issue the lender additional warrants for the purchase of 37,500, 18,750 and 18,750 shares of its common stock, respectively, for an exercise price of the lowest of the fair market value of its common stock as of the start or end of such 90-day period or the lowest public sale price of its common stock during the quarter ended on the applicable measurement date. As these loans have been outstanding for more than 30 days during the 90-day period ending June 30, 2016, the Company accordingly issued the lender an additional warrant for the purchase of 37,500 shares of its common stock on the terms set forth above. These warrants may be exercised through a cashless feature.

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Notes payable consisted of the following at June 30, 2016 and December 31, 2015:

Year Issued	Interest Rate Range	Term of Notes	Conversion Price	Principal Outstanding June 30, 2016		Discount Amount June 30, 2016		Carrying Amount June 30, 2016		Shares Underlying Notes June 30, 2016	Principal Outstanding December 31, 2015		Discount Amount December 31, 2015		Carrying Amount December 31, 2015		Shares Underlying Notes December 31, 2015
Notes payable
2013	10%	Due on demand	—	$	972,200	$	—	$	972,200	—	$	830,000	$	—	$	830,000	—
2014	11%	Due on demand - 2 years	—	613,615		—		613,615		—	1,446,950		—		1,446,950		—
2015	11%	Due on demand - 2 years	—	2,530,532		—		2,530,532		—	2,379,799		—		2,379,799		—
2016	10 - 11%	Due on demand – 12.5 months	—	2,678,335		426,491		2,251,844		—	—		—		—		—
				$	6,794,682	$	426,491	$	6,368,191	—	$	4,656,749	$	—	$	4,656,749	—

		Current		$	6,794,682	$	426,491	$	6,368,191	—	$	4,656,749	$	—	$	4,656,749	—
		Non-current		$	—	$	—	$	—	—	$	—	$	—	$	—	—
Notes payable - related party
2012	8% - 10%	Due on demand	—	$	626,730	$	—	$	626,730	—	$	626,730	$	—	$	626,730	—
2013	8%	Due on demand	—	50,000		—		50,000		—	50,000		—		50,000		—
2014	11%	Due on demand - 2 years	—	—		—		—		—	240,308		—		240,308		—
2015	10% - 11%	Due on demand - 2 years	—	1,621,265		—		1,621,265		—	1,849,266		—		1,849,266		—
2016	10% - 11%	Due on demand - 2 years	—	993,843				993,843		—	—		—		—		—
				$	3,291,838	$	—	$	3,291,838	—	$	2,766,304	$	—	$	2,766,304	—

		Current		$	3,291,838	$	—	$	3,291,838	—	$	2,766,304	$	—	$	2,766,304	—
		Non-current		$	—	$	—	$	—	—	$	—	$	—	$	—	—
Convertible notes payable
2010	6%	5 years	$3.05	$	2,000	$	—	$	2,000	656	$	2,000	$	—	$	2,000	656
2011	10%	5 years	$3.05	300,000		—		300,000		98,285	500,000		—		500,000		163,809
2013	10%	2 years	$3.60	—		—		—		—	525,257		—		525,257		185,553
2014	10%	Due on demand - 2 years	$3.05-$3.60	2,716,505		119,448		2,597,057		887,820	4,378,563		353,700		4,024,863		1,120,470
2015	10%	Due on demand - 2 years	$3.50-$7.00	4,728,288		319,566		4,408,722		1,283,410	5,681,166		526,066		5,155,100		1,517,996
2016	10%	Due on demand - 2 years	$3.50-$4.50	4,061,535		923,086		3,138,449		1,005,657	—		—		—		—
				$	11,808,328	$	1,362,100	$	10,446,228	3,275,828	$	11,086,986	$	879,766	$	10,207,220	2,988,484

		Current		$	7,137,644	$	798,224	$	6,339,420	2,111,764	$	6,358,698	$	358,351	$	6,000,347	1,762,849
		Non-current		$	4,670,684	$	563,876	$	4,106,808	1,164,064	$	4,728,288	$	521,415	$	4,206,873	1,225,635
Convertible notes payable - related party
2012	10%	Due on demand	$3.30	$	254,000	$	—	$	254,000	90,651	$	298,000	$	—	$	298,000	108,505
2015	10%	2 years	$4.50	320,000		—		320,000		75,900	320,000		—		320,000		72,354
				$	574,000	$	—	$	574,000	166,551	$	618,000	$	—	$	618,000	180,859

		Current		$	254,000	$	—	$	254,000	90,651	$	298,000	$	—	$	298,000	108,505
		Non-current		$	320,000	$	—	$	320,000	75,900	$	320,000	$	—	$	320,000	72,354
		Grand Total		$	22,468,848	$	1,788,591	$	20,680,257	3,442,379	$	19,128,039	$	879,766	$	18,248,273	3,169,343

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The average stated interest rate of notes payable as of June 30, 2016 and December 31, 2015 was 10%. The average effective interest rate of notes payable for the six-month period ended June 30, 2016 and the year ended December 31, 2015 was 23% in each period, after giving effect to discounts relating to beneficial conversion features and the fair value of warrants issued in connection with these notes. The notes payable and convertible notes payable do not have restrictive financial covenants or acceleration clauses associated with a material adverse change event. The holders of the convertible notes have the option to convert their notes into the Company’s common stock at the stated conversion price during the term of their convertible notes. Conversion prices on these convertible notes payable range from $3.05 to $3.60 per share. Certain notes with a $4.50 or a $7.00 stated conversion price in the second year of their two year term are subject to automatic conversion into shares of the Company’s common stock at a conversion price equal to 80% of the initial public offering price at the time of a qualified public offering. All due on demand notes are treated as current liabilities.

Contractual principal payments due on notes payable are as follows:

Year Ending	at June 30, 2016
2016	$	12,767,736
2017	6,784,168
2018	2,916,944
Total	$	22,468,848

The Company estimated the total fair value of any beneficial conversion feature and accompanying warrants in allocating the debt proceeds. The proceeds allocated to the beneficial conversion feature were determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company’s common stock as of the date of issuance (see Note 2). The fair value of the warrants issued in conjunction with notes was determined using the Black Scholes Merton option pricing model with the following inputs for the periods ended:

	June 30, 2016			December 31, 2015
Stock price	$	5.00		$	4.50
Exercise price	$	4.50 - 4.70		$	4.90
Term	5 years			5 years
Risk-free interest rate	1.01 - 1.28		%	1.57		%
Expected dividend yield	—			—
Expected volatility	65.4 - 67.8		%	67.3		%

In situations where the debt included both a beneficial conversion feature and a warrant, the proceeds were allocated to the warrants and beneficial conversion feature based on their respective pro rata fair values.

NOTE 6 — STOCKHOLDERS’ DEFICIT

Private placement — On September 11, 2013, the Company issued an aggregate of 3,020,501 units at a price of $2.50 per unit (the “Private Placement”). Each unit consisted of one share of common stock and one common stock warrant for the purchase of an additional share of common stock. The aggregate purchase price for the units was $7,551,253. In addition, 300,000 warrants for the purchase of a share of common stock were issued to a broker under the same terms as the Private Placement transaction (the “Broker Warrants”).

The warrants issued in the Private Placement and the Broker Warrants entitle the holders thereof to purchase, at any time on or prior to September 11, 2018, shares of common stock of the Company at an exercise price of $3.50 per share. The warrants contain non-standard anti-dilution protection and, consequently, are being accounted for as liabilities, were originally recorded at fair value, and are adjusted to fair market value each reporting period. Because the shares of common stock underlying the Private Placement warrants and Broker Warrants were not effectively registered for resale by September 11, 2014, the warrant holders have an option to exercise the warrants using a cashless exercise feature. The shares have not been registered for resale as of June 30, 2016. The availability to warrant holders of the cashless exercise feature as of September 11, 2014 caused the then-outstanding 2,225,036 Private Placement warrants and Broker Warrants with fair value of $7,068,000 to be reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period. On June 10, 2014, certain warrant holders exercised 1,095,465 warrants issued in the Private Placement for the exercise price of $3.50 per share, resulting in the Company receiving aggregate exercise proceeds of $3.8 million and issuing 1,095,465 shares of common stock. Prior to exercise, these Private Placement warrants were accounted for at fair value as liability classified warrants. As of June 10, 2014, immediately prior to exercise, the carrying value of these Private Placement warrants was reduced to their fair value immediately prior to exercise of $1.8 million, representing their intrinsic value, with this adjusted carrying value of $1.8 million being transferred to additional paid-in capital. Also on June 10, 2014, based on an offer made to holders of Private Placement warrants in connection with such exercises, the Company issued an aggregate of 1,095,465 replacement warrants to holders exercising Private Placement warrants, which replacement warrants

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have terms that are generally the same as the exercised warrants, including an expiration date of September 11, 2018 and an exercise price of $3.50 per share. The replacement warrants are treated for accounting purposes as liability classified warrants, and their issuance gave rise to a $3.5 million warrant exercise inducement expense based on their fair value as of issuance as determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. Because the shares of common stock underlying the replacement warrants were not effectively registered for resale by June 10, 2015, the warrant holders have an option to exercise the warrants using a cashless exercise feature. The shares have not been registered for resale as of June 30, 2016. The availability to warrant holders of the cashless exercise feature as of June 10, 2015 caused the then-outstanding 1,095,465 replacement warrants with fair value of $2,545,000 to be reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period.

In connection with the secured loans disclosed in Note 5 for $1,295,000 in April and May 2016, the Company issued the lender warrants for the purchase of 62,500 shares of its common stock at an exercise price of the lowest of the fair market value of its common stock during the quarter ended June 30, 2016 or the lowest public sale price of its common stock during the quarter ended June 30, 2016. These warrants, at issuance dates of April and May 2016, contain variable settlement provisions since the exercise price of these warrants is unknown. As a result, these warrants are initially accounted for as derivative liabilities recorded at fair value as determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model with the adjustment in its fair value charged against earnings through June 30, 2016. As of June 30, 2016, the settlement provision is no longer variable since the exercise price becomes fixed and as a result, the warrants are reclassified to equity as it no longer meets the definition of a liability and/or a derivative liability. The following table illustrates the initial fair value of these warrants on April and May 2016 as well as the fair value of the warrants as of June 30, 2016 as determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model:

	April 2016		May 2016		June 30, 2016		Charge Against Earnings
April 2016 Warrant	$	251,971	$	—	$	260,400	$	8,429
May 2016 Warrant	—		64,639		65,100		461
Total	$	251,971	$	64,639	$	325,500	$	8,890

As of June 30, 2016, the fair value of these Private Placement warrants, replacement warrants, and Broker Warrants was $7,911,000 (see Note 2). For further details regarding registration rights associated with the Private Placement warrants, replacement warrants and Broker Warrants, see the Registration Rights section below in this footnote.

A summary of outstanding warrants as of June 30, 2016 and December 31, 2015 is presented below.

	Six months ended June 30, 2016	Year ended December 31, 2015
Warrants outstanding, beginning of period	3,530,918	5,101,450
Granted	175,000	110,417
Exercised	—	(148,256	)
Cancelled, forfeited or expired	—	(1,532,693	)
Warrants outstanding, end of period	3,705,918	3,530,918

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A summary of outstanding warrants by year issued and exercise price as of June 30, 2016 is presented below.

			Outstanding				Exercisable
Exercise Price			Number of Warrants Issued	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Total	Weighted Average Exercise Price
At December 31, 2013
	$	3.30	50,000	1.84	$	3.30	50,000	$	3.30
	$	3.50	2,225,036	2.20	$	3.50	2,225,036	$	3.50
	2013 total		2,275,036				2,275,036

At December 31, 2014
	$	3.50	1,145,465	2.23	$	3.50	1,145,465	$	3.50
	2014 total		1,145,465				1,145,465

At December 31, 2015
	$	4.90	110,417	3.68	$	4.90	110,417	$	4.90
	2015 total		110,417				110,417
During 2016
	$	4.50	100,000	5.00	$	4.50	100,000	$	4.50
	$	4.70	75,000	4.84	$	4.70	75,000	$	4.70
	Total		3,705,918				3,705,918

Stock options — During the six months ended June 30, 2016, the Company’s Board of Directors granted 2,596,200 options to its officers, directors and employees. Of these options, 300,000 will equally vest one-third on each of the first three anniversaries of the grant date, have an exercise price of $4.70 per share and are exercisable through 2026, 2,296,200 options will vest over three years starting May 10, 2017, have an exercise price of $5.00 per share and are exercisable through 2026. During the year ended December 31, 2015, no options were granted by the Company’s Board of Directors. As of June 30, 2016, there were 7,262,201 options outstanding under the Emmaus Life Sciences, Inc. 2011 Stock Incentive Plan.

A summary of outstanding options as of June 30, 2016 is presented below.

	June 30, 2016				December 31, 2015
	Number of Options		Weighted- Average Exercise Price		Number of Options		Weighted- Average Exercise Price
Options outstanding, beginning of period	4,753,335		$	3.60	5,669,000		$	3.68
Granted or deemed issued	2,596,200		$	4.94	—		$	—
Exercised	(1,866	)	—		(2,000	)	$	3.60
Cancelled, forfeited and expired	(85,468	)	$	4.88	(913,665	)	$	4.05
Options outstanding, end of period	7,262,201		$	4.07	4,753,335		$	3.60
Options exercisable, end of period	4,640,668		$	3.59	4,379,335		$	3.60
Options available for future grant, end of period	1,737,799				4,246,665

During the six months ended June 30, 2016 and 2015, the Company recognized $1.0 million and $2.2 million, respectively, of share-based compensation cost arising from stock options. As of June 30, 2016, there was $7.3 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the 2011 Stock Incentive Plan. That cost is expected to be recognized over the weighted average remaining period of 2.8 years.

Registration rights — Pursuant to the Subscription Agreements relating to the Private Placement and certain warrants, as well as pursuant to the replacement of certain warrants by the Company on June 10, 2014, the Company agreed to use its commercially reasonable best efforts to have on file with the SEC, by September 11, 2014 and at the Company’s sole expense, a registration statement to permit the public resale of 4,115,966 shares of the Company’s common stock and 3,320,501 shares of common stock underlying warrants (collectively, the “Registrable Securities”). In the event such registration statement includes securities to be offered and sold by the Company in a fully underwritten primary public offering pursuant to an effective registration under the Securities Act, and the Company is advised in good faith by any managing underwriter of securities being offered pursuant to such registration statement that the number of Registrable Securities proposed to be sold in such offering is greater than the number of such

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securities which can be included in such offering without materially adversely affecting such offering, the Company will include in such registration the following securities in the following order of priority: (i) any securities the Company proposes to sell, and (ii) the Registrable Securities, with any reductions in the number of Registrable Securities actually included in such registration to be allocated on a pro rata basis among the holders thereof. The registration rights described above apply until all Registrable Securities have been sold pursuant to Rule 144 under the Securities Act or may be sold without registration in reliance on Rule 144 under the Securities Act without limitation as to volume and without the requirement of any notice filing.

If the shares of common stock underlying these warrants to purchase 3,320,501 shares are not registered for resale at the time of exercise, and the registration rights described above then apply with respect to the holder of such warrants, such holder may exercise such warrants on a cashless basis. In such a cashless exercise of all the shares covered by the warrant, the warrant holder would receive a number of shares equal to the quotient of (i) the difference between the fair market value of the common stock, as defined, and the $3.50 exercise price, as adjusted, multiplied by the number of shares exercisable under the warrant, divided by (ii) the fair market value of the common stock, as defined. As of June 30, 2016, based on a fair market value of a share of the Company’s common stock of $5.00 and 3,320,501 warrants issued and outstanding and eligible for cashless exercise, the maximum number of shares the Company would be required to issue, if the warrant holders elected to exercise the cashless exercise feature with respect to all then eligible warrants, is 996,150 shares. If the fair market value of a share of the Company’s common stock were to increase by $1.00 from $5.00 to $6.00, the maximum number of shares the Company would be required to issue, if the warrant holders elected to exercise the cashless exercise feature with respect to all then eligible warrants, would increase to 1,383,542 shares as of June 30, 2016.

The Company has not yet filed a registration statement with respect to the resale of the Registrable Securities because doing so is not feasible prior to the completion by the Company of its initial public offering. As previously reported, the Company has filed a draft registration statement with the SEC with respect to its proposed initial public offering. The Company believes that it has used commercially reasonable efforts to pursue an initial public offering and, accordingly, considers itself to be in compliance with its registration rights obligations notwithstanding that it has not filed a registration statement with respect to the resale of the Registrable Securities and the deadline for doing so has passed without extension.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Distribution contract — Cardinal Health Specialty Pharmacy Services has been contracted to distribute NutreStore to other wholesale distributors and some independent pharmacies since April 2008. For these services, the Company pays a monthly commercialization management fee of $5,000.

Operating leases — The Company leases its office space under operating leases with unrelated entities. The rent expense during the three months ended June 30, 2016 and 2015 amounted to $147,598 and $125,122, respectively. The rent expense during the six months ended June 30, 2016 and 2015 amounted to $ 291,963 and $243,314, respectively.

Future minimum lease payments under the agreements are as follows as of June 30, 2016:

Year	Amount
2016 (six months)	$	284,507
2017	561,670
2018	517,790
2019	123,875
	$	1,487,842

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NOTE 8 — RELATED PARTY TRANSACTIONS

The following table sets forth information relating to the Company’s loans from related parties outstanding as of June 30, 2016.

Class	Lender	Interest Rate		Date of Loan	Term of Loan	Principal Amount Outstanding at June 30, 2016		Highest Principal Outstanding		Amount of Principal Repaid		Amount of Interest Paid		Conversion Rate		Shares Underlying Notes June 30, 2016
Current, Promissory note payable to related parties:
	Hope Hospice (1)	8	%	1/17/2012	Due on demand	$	200,000	$	200,000	$	—	$	8,000	$	—	—
	Hope Hospice (1)	8	%	6/14/2012	Due on demand	200,000		200,000		—		4,000		—		—
	Hope Hospice (1)	8	%	6/21/2012	Due on demand	100,000		100,000		—		2,000		—		—
	Yutaka Niihara (2)(4)	10	%	12/5/2012	Due on demand	126,730		1,213,700		1,086,970		—		—		—
	Hope Hospice (1)	8	%	2/11/2013	Due on demand	50,000		50,000		—		2,000		—		—
	Hope Hospice (1)	10	%	1/7/2015	2 years (3)	100,000		100,000		—		—		—		—
	James Lee (5)	10	%	1/26/2015	2 years (3)	50,000		50,000		—		—		—		—
	Hope Hospice (1)	10	%	1/29/2015	2 years (3)	—		30,000		30,000		2, 910		—		—
	Lan T. Tran (2)	10	%	2/9/2015	2 years (3)	10,000		10,000		—		—		—		—
	Charles Stark (2)	10	%	2/10/2015	2 years (3)	10,000		10,000		—		—		—		—
	IRA Service Trust Co. FBO Peter B. Ludlum (2)	10	%	2/20/2015	2 years (3)	10,000		10,000		—		—		—		—
	Cuc T. Tran (5)	11	%	3/5/2015	1 year	13,161		13,161		—		—		—		—
	Yutaka Niihara (2)(4)	10	%	4/7/2015	2 years (3)	302,000		500,000		198,000		15,603		—		—
	Yutaka Niihara (2)(4)	10	%	5/21/2015	Due on demand	826,105		826,105		—		47,822		—		—
	Masaharu & Emiko Osato (4)	11	%	12/29/2015	Due on demand	300,000		300,000		—		—		—		—
	Lan T. Tran (2)	11	%	2/10/2016	2 years (3)	130,509		130,509		—		—		—		—
	Hideki & Eiko Uehara (5)	11	%	2/15/2016	Due on demand	133,333		133,333		—		3,667		—		—
	Masaharu & Emiko Osato (4)	11	%	2/25/2016	Due on demand	400,000		400,000		—		—		—		—
	Hope Hospice (1)	10	%	4/4/2016	Due on demand	50,000		50,000		—		—		—		—
	Willis C. Lee (2)(4)	10	%	4/8/2016	Due on demand	—		79,700		79,700		1,288		—		—
	Lan T. Tran (2)	10	%	4/29/2016	Due on demand	20,000		20,000		—		—		—		—
	IRA Service Trust Co. FBO Peter B. Ludlum (2)	10	%	5/5/2016	Due on demand	10,000		10,000		—		—		—		—
	Hope Hospice (1)	10	%	6/3/2016	Due on demand	250,000		250,000		—		—		—		—
					Sub total	$	3,291,838	$	4,686,508	$	1,394,670	$	87,290	$	—	—

Current, Convertible notes payable to related parties:
	Yasushi Nagasaki (2)	10	%	6/29/2012	Due on demand	$	254,000	$	388,800	$	134,800	$	27,824	$	3.30	90,651
					Sub total	$	254,000	$	388,800	$	134,800	$	27,824	$	—	90,651

Non-Current, Convertible notes payable to related parties:
	Yutaka Niihara (2)(4)	10	%	9/29/2015	2 years	$	100,000	$	100,000	$	—	$	—	$	4.50	23,902
	Charles & Kimxa Stark (2)	10	%	10/1/2015	2 years	20,000		20,000		—		—		4.50		4,778
	Yutaka & Soomi Niihara (2)(4)	10	%	11/16/2015	2 years	200,000		200,000		—		—		4.50		47,220
					Sub total	$	320,000	$	320,000	$	—	$	—	$	—	75,900

					Total	$	3,865,838	$	5,395,308	$	1,529,470	$	115,114	$	—	166,551

(1) Dr. Niihara, a director and officer of the Company, is also the CEO of Hope Hospice.

(2) Officer

(3) Due on Demand

(4) Director

(5) Family of Officer/Director

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The following table sets forth information relating to the Company’s loans from related parties outstanding as of December 31, 2015.

Class	Lender	Annual Interest Rate		Date of Loan	Term of Loan	Principal Amount Outstanding at December 31, 2015		Highest Principal Outstanding		Amount of Principal Repaid		Amount of Interest Paid		Conversion Rate		Shares Underlying Notes at December 31, 2015
Current, Notes payable to related parties:
	Hope Hospice(1)	8	%	1/17/2012	Due on demand	$	200,000	$	200,000	$	—	$	8,000	$	—	—
	Hope Hospice(1)	8	%	6/14/2012	Due on demand	200,000		200,000		—		8,000		—		—
	Hope Hospice(1)	8	%	6/21/2012	Due on demand	100,000		100,000		—		4,000		—		—
	Yutaka Niihara(2)(4)	10	%	12/5/2012	Due on demand	126,730		1,213,700		1,086,970		56,722		—		—
	Hope Hospice(1)	8	%	2/11/2013	Due on demand	50,000		50,000		—		2,000		—		—
	Lan T. Tran(2)	11	%	2/10/2014	2 years(3)	106,976		106,976		—		—		—		—
	Hideki & Eiko Uehara(5)	11	%	2/15/2014	2 years	133,333		133,333		—		—		—		—
	Hope Hospice(1)	10	%	1/7/2015	2 years(3)	100,000		100,000		—		—		—		—
	James Lee(5)	10	%	1/26/2015	2 years(3)	50,000		50,000		—		—		—		—
	Hope Hospice(1)	10	%	1/29/2015	2 years(3)	30,000		30,000		—		—		—		—
	Yutaka Niihara(2)(4)	10	%	1/29/2015	Due on demand	—		20,000		20,000		773		—		—
	Lan T. Tran(2)	10	%	2/9/2015	2 years(3)	10,000		10,000		—		—		—		—
	Charles Stark(2)	10	%	2/10/2015	2 years(3)	10,000		10,000		—		—		—		—
	IRA Service Trust Co. FBO Peter B. Ludlum(2)	10	%	2/20/2015	2 years(3)	10,000		10,000		—		—		—		—
	Cuc T. Tran(5)	11	%	3/5/2015	1 year	13,161		13,161		—		—		—		—
	Yutaka Niihara(2)(4)	10	%	4/7/2015	2 years(3)	500,000		500,000		—		—		—		—
	Yutaka Niihara(2)(4)	10	%	5/21/2015	Due on demand	826,105		826,105		—		—		—		—
	Masaharu & Emiko Osato(4)	11	%	12/29/2015	Due on demand	300,000		300,000		—		—		—		—
					Sub total	$	2,766,304	$	3,873,275	$	1,106,970	$	79,495	$	—	—
Current, Convertible notes payable to related parties:
	Yasushi Nagasaki(2)	10	%	6/29/2012	Due on demand	$	298,000	$	388,800	$	90,800	$	—	$	3.30	108,505
					Sub total	$	298,000	$	388,800	$	90,800	$	—	$	—	108,505
Non-Current, convertible notes payable to related parties:
	Yutaka Niihara(2)(4)	10	%	9/29/2015	2 years	$	100,000	$	100,000	$	—	$	—	$	4.50	22,794
	Charles & Kimxa Stark(2)	10	%	10/1/2015	2 years	20,000		20,000		—		—		4.50		4,556
	Yutaka & Soomi Niihara(2)(4)	10	%	11/16/2015	2 years	200,000		200,000		—		—		4.50		45,004
					Sub total	320,000		320,000		$	—	$	—	$	—	72,354
					Total	$	3,384,304	$	4,582,075	$	1,197,770	$	—	$	—	180,859

(1) Dr. Niihara, a director and officer of the Company, is also the CEO of Hope Hospice.

(2) Officer

(3) Due on Demand

(4) Director

(5) Family of Officer/Director

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NOTE 9 — GEOGRAPHIC INFORMATION

For the six months ended June 30, 2016 and 2015, the Company earned revenue from countries outside of the United States as outlined in the table below:

Country	Revenues for the six months ended June 30, 2016		% of total revenue for the six months ended June 30, 2016		Revenues for the six months ended June 30, 2015		% of total revenue for the six months ended June 30, 2015
Japan	$	81,095	32	%	$	99,613	41	%
Taiwan	134,267		53	%	110,104		46	%

For the three months ended June 30, 2016 and 2015, the Company earned revenue from countries outside of the United States as outlined in the table below:

Country	Revenues for the three months ended June 30, 2016		% of total revenue for the three months ended June 30, 2016		Revenues for the three months ended June 30, 2015		% of total revenue for the three months ended June 30, 2015
Japan	$	30,021	17	%	$	57,379	40	%
Taiwan	109,056		63	%	67,491		47	%

The Company did not have any significant currency translation or foreign transaction adjustments during the six months ended June 30, 2016 and 2015.

NOTE 10 — SUBSEQUENT EVENTS

Subsequent to June 30, 2016, the Company issued the following:

Note issued after June 30, 2016	Amount		Annual Interest Rate		Term of Note	Conversion Price
Convertible note	$	100,000	10.00	%	2 years	$	4.50
Total	$	100,000

Subsequent to June 30, 2016, the Company issued the following:

Common Shares Issued after June 30, 2016	Amount		Number of Shares Issued
Common shares	$	899,996	199,999
Total	$	899,996	199,999

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

With respect to the following discussion, the terms, “we,” “us,” “our” or the “Company” refer to Emmaus Life Sciences, Inc., and its wholly-owned subsidiary Emmaus Medical, Inc., a Delaware corporation which we refer to as Emmaus Medical, and Emmaus Medical’s wholly-owned subsidiaries, Newfield Nutrition Corporation, a Delaware corporation which we refer to as Newfield Nutrition; Emmaus Medical Japan, Inc., a Japanese corporation which we refer to as EM Japan, and Emmaus Medical Europe Ltd., a U.K. corporation which we refer to as EM Europe.

Forward-Looking Statements

This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2015 and 2014 and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on May 20, 2016 (the “Annual Report”).

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than historical facts contained in this report, including statements regarding our future financial position, capital expenditures, cash flows, business strategy and plans and objectives of management for future operations are forward-looking statements. The words “anticipate,” “believe,” “expect,” “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may” and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, our ability to raise additional capital to fund our operations, obtaining U.S. Food and Drug Administration (“FDA”) and other regulatory authorization to market our drug and biological products, successful completion of our clinical trials, our ability to achieve regulatory authorization to market our pharmaceutical grade L-glutamine treatment for sickle cell disease (“SCD”), our ability to commercialize our pharmaceutical grade L-glutamine treatment for SCD; our reliance on third party manufacturers for our drug products, market acceptance of our products, our dependence on licenses for certain of our products, our reliance on the expected growth in demand for our products, exposure to product liability and defect claims, development of a public trading market for our securities, and various other matters, many of which are beyond our control.

Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and accordingly there can be no assurances made with respect to the actual results or developments.

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Company Overview

We are a biopharmaceutical company engaged in the discovery, development and commercialization of innovative treatments and therapies primarily for rare and orphan diseases. We are initially focusing our product development efforts on SCD, a genetic disorder and a significant unmet medical need. Our lead product candidate is an oral pharmaceutical grade L-glutamine treatment that demonstrated positive clinical results in our completed Phase 3 clinical trial for sickle cell anemia and sickle ß0-thalassemia, two of the most common forms of SCD.

We are in the process of preparing a new drug application (“NDA”) for submission to the FDA, with respect to this product candidate. If the FDA accepts our submission and approves this NDA, we will be authorized to market in the United States our pharmaceutical grade L-glutamine treatment for SCD patients who are at least five years old.

We plan to market our L-glutamine treatment in the United States, if approved, by either strategic partnership or by building our own targeted sales force of approximately 30 sales representatives. We intend to utilize strategic partnerships to market our treatment in the rest of the world. L-glutamine for the treatment of SCD has received Fast Track designation from the FDA as well as Orphan Drug designation from both the FDA and the European Commission (“EC”).

We have extensive experience in the field of SCD, including the development, outsourced manufacturing and conduct of clinical trials of our prescription grade L-glutamine product candidate for the treatment of SCD. Yutaka Niihara, M.D., MPH, is a leading hematologist in the field of SCD. Dr. Niihara is licensed to practice medicine in both the United States and Japan and has been actively engaged in SCD research and the care of patients with SCD for over 20 years, primarily at the University of California Los Angeles and the Los Angeles Biomedical Research Institute (“LA BioMed”) a nonprofit biomedical research institute at Harbor UCLA Medical Center.

To a lesser extent, we are also engaged in the marketing and sale of NutreStore L-glutamine powder for oral solution, which has received FDA approval, as a treatment for short bowel syndrome (“SBS”) in patients receiving specialized nutritional support when used in conjunction with a recombinant human growth hormone that is approved for this indication. Our indirect wholly owned subsidiary, Newfield Nutrition , sells L-glutamine as a nutritional supplement under the brand name AminoPure through retail stores in multiple states and via importers and distributors in Japan, Taiwan and South Korea. Since inception, we have generated minimal revenues from the sale and promotion of NutreStore and AminoPure.

In May 2006, we formed Newfield Nutrition, a wholly-owned subsidiary of Emmaus Medical, that distributes L-glutamine as a nutritional supplement under the brand name AminoPure.

In October 2010, we formed EM Japan, a wholly-owned subsidiary of Emmaus Medical, that markets and sells AminoPure in Japan and other countries in Asia. EM Japan also manages our distributors in Japan and may also import other medical products and drugs in the future.

In November 2011, we formed EM Europe, a wholly-owned subsidiary of Emmaus Medical, whose primary focus is expanding our business in Europe.

Our corporate structure is illustrated as follows:

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Emmaus Medical, LLC was organized on December 20, 2000. In October 2003, Emmaus Medical, LLC undertook a reorganization and merged with Emmaus Medical, which was originally incorporated in September 2003.

Pursuant to an Agreement and Plan of Merger dated April 21, 2011, which we refer to as the Merger Agreement, by and among us, AFH Merger Sub, Inc., our wholly-owned subsidiary, which we refer to as AFH Merger Sub, AFH Advisory and Emmaus Medical, Emmaus Medical merged with and into AFH Merger Sub on May 3, 2011 with Emmaus Medical continuing as the surviving entity, which we refer to as the Merger. Upon the closing of the Merger, we changed our name from “AFH Acquisition IV, Inc.” to “Emmaus Holdings, Inc.” Subsequently, on September 14, 2011, we changed our name from “Emmaus Holdings, Inc.” to “Emmaus Life Sciences, Inc.”

Our future capital requirements are substantial and may increase beyond our current expectations depending on many factors, including, but not limited to: the duration and results of the clinical trials for our various products candidates going forward; unexpected delays or developments when seeking regulatory approvals; the time and cost in preparing, filing, prosecuting, maintaining and enforcing patent claims; current and future unexpected developments encountered in implementing our business development and commercialization strategies; the outcome of litigation in which we may become engaged in the future; and further arrangements, if any, with collaborators. Until we can generate a sufficient amount of product revenue, future cash requirements are expected to be financed through registered or unregistered equity offerings, debt financings or corporate collaboration and licensing arrangements. As of June 30, 2016, our accumulated deficit was $92.4 million and we had cash and cash equivalents of $0.3 million. Since inception we have had minimal revenues and have been required to rely on funding from sales of equity securities and borrowings from officers and stockholders. Currently, we estimate we will need approximately $1.1 million to submit a NDA to the FDA for our pharmaceutical grade L-glutamine treatment for SCD. We expect the NDA will be submitted in September 2016.

We also own a minority interest of less than 1% in CellSeed, Inc., a Japanese company listed on the Tokyo Stock Exchange, which is engaged in research and development of regenerative medicine products and the manufacture and sale of temperature-responsive cell culture equipment. In collaboration with CellSeed, we are engaged in research and development of cell sheet engineering regenerative medicine products.

Financial Overview

Revenue

Since our inception in 2000, we have had limited revenue from the sale of NutreStore, an FDA approved prescription drug to treat SBS and AminoPure, a nutritional supplement. We have funded operations principally through the private placement of equity securities and debt financings. Our operations to date have been primarily limited to staffing, licensing and promoting products for SBS, outsourcing distribution and sales activities, developing and sponsoring clinical trials of our pharmaceutical grade L-glutamine treatment for SCD, manufacturing products and maintaining and improving our patent portfolio.

Currently, we generate revenue through the sale of NutreStore L-glutamine powder for oral solution as a treatment for SBS as well as AminoPure, a nutritional supplement. Pursuant to the exclusive sublicense agreement for US Patent No. 5,288,703, we are required to pay an annual royalty equal to 10% of adjusted gross sales of NutreStore to CATO Holding Company (“CATO”). Management expects that any revenues generated from the sale of NutreStore and AminoPure will fluctuate from quarter to quarter based on the timing of orders and the amount of product sold.

Cost of Goods Sold

Cost of goods sold includes the raw materials, packaging, shipping and distribution costs of NutreStore and AminoPure.

Research and Development Expenses

Research and development costs consist of expenditures for new products and technologies, which primarily involve fees paid to the contract research organization (“CRO”), that conducts the clinical trials of our product candidates, payroll-related expenses, study site payments, consultant fees, and activities related to regulatory filings, manufacturing development costs and other related supplies. The costs of later stage clinical studies, such as Phase 2 and 3 trials, are generally higher than those of earlier stages of development, such as preclinical studies and Phase 1 trials. This is primarily due to the increased size, expanded scope, patient related healthcare and regulatory compliance costs, and generally longer duration of later stage clinical studies.

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The most significant clinical trial expenditures in prior years have been related to the CRO costs and the payments to study sites. The contract with the CRO is based on time and material expended, whereas the study site agreements are based on per patient costs as well as other pass-through costs, including, but not limited to, start-up costs and institutional review board fees. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones.

Future research and development expenses will depend on any new product candidates or technologies that we may introduce into our research and development pipeline. In addition, we cannot forecast with any degree of certainty which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree, if any, such arrangements would affect our development plans and capital requirements. We currently estimate that we will need an additional $1.1 million to submit a NDA to the FDA for our pharmaceutical grade L-glutamine treatment for SCD. We expect the NDA will be submitted in September of 2016.

At this time, due to the inherently unpredictable nature of the process for developing drugs, biologics and cell-based therapies and the interpretation of the regulatory requirements, we are unable to estimate with any degree of certainty the amount of costs which will be incurred in obtaining FDA approval of our pharmaceutical grade L-glutamine treatment for SCD and the continued development of our other preclinical and clinical programs. Clinical development timelines, the probability of success and development costs can differ materially from expectations and can vary widely. These and other risks and uncertainties relating to product development are described in the Annual Report under the headings “Risk Factors—Risks Related to Development of our Product Candidates,” “Risk Factors—Risks Related to our Reliance on Third Parties,” and “Risk Factors—Risks Related to Regulatory Approval of our Product Candidates and Other Legal Compliance Matters.”

We estimate that the cost to us to develop in the United States corneal cell sheet products based on Cultured Autologous Oral Mucosal Epithelial Cell-Sheets (“CAOMECS”) technology will be approximately $3.0 million. This estimate includes the anticipated cost of obtaining FDA approval for the corneal cell sheets and assumes that we will need the FDA to approve a Biologic License Application (“BLA”) for the corneal cell sheets, rather than a NDA. We estimate that we will need another $2.4 million to commercialize any approved products based on corneal cell sheet technology.

In addition, we estimate that we will need $2.5 million for research related to other cell sheet applications and to build a current Good Manufacturing Practices (“cGMP”) laboratory to establish the infrastructure and production capabilities related to regenerative medicine products. At this time, we do not plan to incur any research and development costs for our NutreStore and AminoPure products.

General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs, including share-based compensation, for personnel in executive, finance, business development, information technology, marketing and legal functions. Other general and administrative expenses include facility costs, patent filing costs and professional fees and expenses for legal, consulting, auditing and tax services. Inflation has not had a material impact on our general and administrative expenses over the past two years.

Environmental Expenses

The cost of compliance with environmental laws has not been material over the past two years and any such costs are included in general and administrative costs.

Inventories

Inventories consist of finished goods and work-in-process and are valued on a first-in, first-out basis and at the lower of cost or market value. All of the raw material purchased during the six months ended June 30, 2016 and 2015 were from one vendor.

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Results of Operations

Three months ended June 30, 2016 and 2015

Net Losses . Net losses increased by $1.5 million, or 90%, to $3.1 million from $1.6 million for the three months ended June 30, 2016 and 2015, respectively. The increase in losses is primarily a result of increased other expenses, partially offset by decreased operating expenses, in each case as discussed below. As of June 30, 2016, we had an accumulated deficit of approximately $92.4 million. Losses, partially offset by revenue from commercialized products, will continue as we advance our sickle cell treatment toward potential regulatory approval and commercialization. As a result, we anticipate that we will continue to incur net losses and be unprofitable for the foreseeable future. There can be no assurance that we will ever operate at a profit, even if all of our products are commercialized.

Revenues, Net . Net revenues increased by $28,000, or 20%, to $173,000 from $145,000 for the three months ended June 30, 2016 and 2015. Combined revenues from our AminoPure® L-glutamine nutritional supplement product and our NutreStore® L-glutamine powder for oral solution for treatment of SBS decreased during these periods. The increase is primarily due to increased sales volume of our AminoPure® L-glutamine nutritional supplement product in international markets.

Cost of Goods Sold . Cost of goods sold increased by $19,000, or 30%, to $83,000 from $64,000 for the three months ended June 30, 2016 and 2015. Cost of goods sold includes costs for raw material, packaging, testing, shipping and costs related to scrapped inventory. All of the raw material purchased during the three months ended June 30, 2016 and 2015 was from one vendor. Cost of goods sold increased due to increased sales in international markets associated with our AminoPure® L-glutamine nutritional supplement product and our NutreStore® L-glutamine powder for oral solution for treatment of SBS during these periods. The increase in the cost of goods sold in 2016 can be attributed to the increase in international sales, which has a lower gross profit margin.

Research and Development Expenses . Research and development expenses increased by $0.3 million, or 93%, to $0.6 million from $0.3 million for the three months ended June 30, 2016 and 2015. This increase was primarily due to an increase in our preparation of NDA submission activities. We expect our research and development costs to increase in the rest of 2016 to support our NDA post-submission activities, work on marketing approvals outside the US and potentially future clinical trial activity.

Selling Expenses . Selling expenses remained approximately the same at just under $0.1 million for the three months ended June 30, 2016 and 2015. Selling expenses includes the costs for distribution, promotion, travel, tradeshows and exhibits related to NutreStore® and AminoPure® as well as the marketing expense for our pharmaceutical grade L-glutamine treatment for SCD.

General and Administrative Expenses. General and administrative expenses decreased $0.1 million, or 4%, to $2.3 million from $2.4 million for the three months ended June 30, 2016 and 2015. General and administrative expenses include share-based compensation expenses, professional fees, office rent, and payroll expenses. This decrease was primarily due to a decrease of $0.4 million for share-based compensation due to expiration of certain options partially offset by an increase of $0.2 million for the foreign exchange adjustments on convertible notes and notes payable and an increase of $0.1 million for professional fees.

Other Income and Expense . Total other expense increased by $1.3 million, or 130%, to $0.3 million expense for the three months ended June 30, 2016, compared to $1.0 million income for the three months ended June 30, 2015, primarily due to absences of gain on derecognition of accounts payable and settlement of litigation of $0.4 million and change in fair value of liability classified warrants of $0.5 million, a negative change in fair value of warrant derivative liabilities of $0.1 million and an increase in interest costs of $0.2 million as a result of increased debt.

We anticipate that our operating expenses will increase for, among others, the following reasons:

· as a result of increased payroll, expanded infrastructure and higher consulting, legal, accounting and investor relations costs, and director and officer insurance premiums associated with being a public company;

· to support research and development activities, which we expect to expand as development of our product candidate(s) continues and we approach submission of an NDA for pharmaceutical grade L-glutamine treatment for SCD; and

· to build a sales and marketing team before we receive regulatory approval of a product candidate in anticipation of commercial launch.

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Six months ended June 30, 2016 and 2015

Net Losses . Net losses increased by $2.7 million, or 55%, to $7.6 million from $4.9 million for the six months ended June 30, 2016 and 2015, respectively. The increase in losses is primarily a result of increased other expenses, partially offset by decreased operating expenses, in each case as discussed below. As of June 30, 2016, we had an accumulated deficit of approximately $92.4 million. Losses, partially offset by revenue from commercialized products, will continue as we advance our sickle cell treatment toward potential regulatory approval and commercialization. As a result, we anticipate that we will continue to incur net losses and be unprofitable for the foreseeable future. There can be no assurance that we will ever operate at a profit, even if all of our products are commercialized.

Revenues, Net . Net revenues remained approximately the same at $250,000 for the six months ended June 30, 2016 and 2015. Combined revenues from our AminoPure® L-glutamine nutritional supplement product and our NutreStore® L-glutamine powder for oral solution for treatment of SBS remained at the same level during these periods.

Cost of Goods Sold . Cost of goods sold remained approximately the same at just over $0.1 million for the six months ended June 30, 2016 and 2015. Cost of goods sold includes costs for raw material, packaging, testing, shipping and costs related to scrapped inventory. All of the raw material purchased during the six months ended June 30, 2016 and 2015 was from one vendor.

Research and Development Expenses . Research and development expenses increased by $0.5 million, or 99%, to $1.1 million from $0.6 million for the six months ended June 30, 2016 and 2015. This increase was primarily due to an increase in our preparation of NDA submission activities. We expect our research and development costs to continue through the rest of 2016 to support our NDA post-submission activities, work on marketing approvals outside the US and potentially future clinical trial activity.

Selling Expenses . Selling expenses decreased by $67,000, or 27%, to $179,000 from $246,000 for the six months ended June 30, 2016 and 2015 due primarily to a decrease in marketing, advertising and travel expenses. Selling expenses includes the costs for distribution, promotion, travel, tradeshows and exhibits related to NutreStore® and AminoPure® as well as the marketing expense for our pharmaceutical grade L-glutamine treatment for SCD.

General and Administrative Expenses. General and administrative expenses decreased by $0.7 million, or 13%, to $4.5 million from $5.2 million for the six months ended June 30, 2016 and 2015. General and administrative expenses include share-based compensation expenses, professional fees, office rent, and payroll expenses. This decrease was primarily due to a decrease of $1.2 million for share-based compensation due to expiration of certain options, partially offset by an increase of $0.4 million for professional fees and office rent expenses and $0.1 million for insurance expenses.

Other Income and Expense . Total other expense increased by $2.9 million, or 296%, to $1.9 million expense for the six months ended June 30, 2016, compared to $1.0 million income for the six months ended June 30, 2015, primarily due to absences of gain on derecognition of accounts payable and settlement of litigation of $0.4 million and change in fair value of liability classified warrants of $0.7 million, a negative change in fair value of warrant derivative liabilities of $1.4 million and an increase in interest costs of $0.3 million as a result of increased debt.

We anticipate that our operating expenses will increase for, among others, the following reasons:

· to build a sales and marketing team before we receive regulatory approval of a product candidate in anticipation of commercial launch.

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Liquidity and Capital Resources

Based on our losses to date, anticipated future revenue and operating expenses, debt repayment obligations and cash and cash equivalents balance of $0.3 million as of June 30, 2016, we do not have sufficient operating capital for our business without raising additional capital. We incurred losses of $7.6 million for the six months ended June 30, 2016 and $4.9 million for the six months ended June 30, 2015. We had an accumulated deficit at June 30, 2016 of $92.4 million. We anticipate that we will continue to incur net losses for the foreseeable future as we incur expenses for submission of the NDA, the commercialization of our pharmaceutical grade L-glutamine treatment of SCD, research costs for the corneal cell sheets using CAOMECS technology and the expansion of corporate infrastructure, including costs associated with being a public reporting company and potentially additional expenses that may be associated with an initial public offering. We have previously relied on unregistered equity offerings, debt financings and loans, including loans from related parties. As part of this effort, we have received various loans from officers, stockholders and other investors as discussed below. As of June 30, 2016, we had outstanding notes payable in an aggregate principal amount of $22.5 million, consisting of $10.1 million of non-convertible promissory notes and $12.4 million of convertible notes. Of the $22.5 million aggregate principal amount of notes outstanding as of June 30, 2016, approximately $16.3 million is either due on demand or will become due and payable within the next twelve months. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategies, including the commercialization of our pharmaceutical grade L-glutamine treatment for SCD and the development in the United States of CAOMECS-based cell sheet technology.

We have had recurring operating losses, have a significant amount of notes payable and other obligations due within the next year and projected operating losses including the expected costs relating to the commercialization of our pharmaceutical grade L-glutamine treatment for SCD that exceed both the existing cash balances and cash expected to be generated from operations for at least the next year. In order to meet our expected obligations, management intends to raise additional funds through equity and debt financings and partnership agreements. In addition, we may seek to raise additional funds through collaborations with other companies or financing from other sources. As previously reported, we have filed a draft registration statement with the SEC with respect to an initial public offering. Additional funding may not be available in amounts or on terms which are acceptable to us, if at all. Due to the uncertainty of our ability to meet our current operating and capital expenses, there is substantial doubt about our ability to continue as a going concern.

In addition, we currently estimate that we will need an additional $1.1 million to submit a NDA to the FDA for our pharmaceutical grade L-glutamine treatment for SCD. Our cash burn rate for the first six months ending June 30, 2016 was approximately $0.7 million per month.

As discussed in our Annual Report under the heading “Risk Factors—Risks Related to Development of our Product Candidates,” if the FDA does not accept for filing our NDA for our pharmaceutical grade L-glutamine treatment or does not approve our NDA based on a single Phase 3 clinical trial, in each case unless we conduct a second Phase 3 clinical trial or confirmatory study, the potential approval of our product candidate will be delayed. Under these circumstances, we will incur additional costs to seek to convince the FDA that a confirmatory study is unnecessary for filing or approval, or to design and conduct a second Phase 3 clinical trial or confirmatory study, or both. If we conduct a second Phase 3 clinical trial or confirmatory study prior to the approval of our NDA, it is possible that the results of that trial will be less favorable than the results of our completed Phase 3 trial and further delay or complicate the approval process. The incurrence of additional costs may require us to raise additional capital, and any delay in obtaining approval of our product candidate will reduce the period during which we can market and sell our product with patent protection and may affect our ability to obtain other protections against competition.

Our cash flow from operations is not adequate and our future capital requirements will be substantial and may increase beyond our current expectations depending on many factors including, but not limited to: the number, duration and results of the clinical trials for our various product candidates going forward; unexpected delays or developments in seeking regulatory approvals; the time and cost in preparing, filing, prosecuting, maintaining and enforcing patent claims; other unexpected developments encountered in implementing our business and commercialization strategies; the outcome of and expenses incurred during existing and any future litigation; and further arrangements, if any, with collaborators. We will rely, in part, on sales of AminoPure for revenues, which we expect will increase due to the expected growth in its export volume as we have added additional distributors and expanded retail markets outside of the United States. Revenues from NutreStore currently are not significant and we are unsure whether sales of NutreStore will increase. Until we can generate a sufficient amount of product revenue, future cash needs are expected to be financed through registered or unregistered equity offerings, debt financings, loans, including loans from related parties, or other sources, such as strategic partnership agreements and corporate collaboration and licensing arrangements. Until we can generate a sufficient amount of product revenue, there can be no assurance of the availability of such capital on terms acceptable to us (or at all).

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For the six months ended June 30, 2016 and during the year ended December 31, 2015, we borrowed $3.4 million and $7.3 million, respectively, pursuant to convertible notes and non-convertible promissory notes, of which $0.8 million and $2.2 million, respectively, have been issued to related parties. As of June 30, 2016 and December 31, 2015, the aggregate principal amounts outstanding under convertible notes and non-convertible promissory notes totaled $22.5 million and $19.1 million, respectively. The convertible notes and non-convertible promissory notes bear interest at rates ranging from 6% to 11% and are unsecured, except for a 2011 convertible note in the principal amount of $0.3 million and two of 2016 non-convertible promissory notes in an aggregate principal amount of $1.3 million. The net proceeds of the loans were used for working capital.

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The table below lists our outstanding notes payable as of June 30, 2016 and December 31, 2015 and the material terms of our outstanding borrowings:

Year Issued	Interest Rate Range	Term of Notes	Conversion Price	Principal Outstanding June 30, 2016		Discount Amount June 30, 2016		Carrying Amount June 30, 2016		Shares Underlying Notes June 30, 2016	Principal Outstanding December 31, 2015		Discount Amount December 31, 2015		Carrying Amount December 31, 2015		Shares Underlying Notes December 31, 2015
Notes payable
2013	10%	Due on demand	—	$	972,200	$	—	$	972,200	—	$	830,000	$	—	$	830,000	—
2014	11%	Due on demand - 2 years	—	613,615		—		613,615		—	1,446,950		—		1,446,950		—
2015	11%	Due on demand - 2 years	—	2,530,532		—		2,530,532		—	2,379,799		—		2,379,799		—
2016	10 - 11%	Due on demand – 12.5 months	—	2,678,335		426,491		2,251,844		—	—		—		—		—
				$	6,794,682	$	426,491	$	6,368,191	—	$	4,656,749	$	—	$	4,656,749	—

		Current		$	6,794,682	$	426,491	$	6,368,191	—	$	4,656,749	$	—	$	4,656,749	—
		Non-current		$	—	$	—	$	—	—	$	—	$	—	$	—	—
Notes payable - related party
2012	8% - 10%	Due on demand	—	$	626,730	$	—	$	626,730	—	$	626,730	$	—	$	626,730	—
2013	8%	Due on demand	—	50,000		—		50,000		—	50,000		—		50,000		—
2014	11%	Due on demand - 2 years	—	—		—		—		—	240,308		—		240,308		—
2015	10% - 11%	Due on demand - 2 years	—	1,621,265		—		1,621,265		—	1,849,266		—		1,849,266		—
2016	10% - 11%	Due on demand - 2 years	—	993,843				993,843		—	—		—		—		—
				$	3,291,838	$	—	$	3,291,838	—	$	2,766,304	$	—	$	2,766,304	—

		Current		$	3,291,838	$	—	$	3,291,838	—	$	2,766,304	$	—	$	2,766,304	—
		Non-current		$	—	$	—	$	—	—	$	—	$	—	$	—	—
Convertible notes payable
2010	6%	5 years	$3.05	$	2,000	$	—	$	2,000	656	$	2,000	$	—	$	2,000	656
2011	10%	5 years	$3.05	300,000		—		300,000		98,285	500,000		—		500,000		163,809
2013	10%	2 years	$3.60	—		—		—		—	525,257		—		525,257		185,553
2014	10%	Due on demand - 2 years	$3.05-$3.60	2,716,505		119,448		2,597,057		887,820	4,378,563		353,700		4,024,863		1,120,470
2015	10%	Due on demand - 2 years	$3.50-$7.00	4,728,288		319,566		4,408,722		1,283,410	5,681,166		526,066		5,155,100		1,517,996
2016	10%	Due on demand - 2 years	$3.50-$4.50	4,061,535		923,086		3,138,449		1,005,657	—		—		—		—
				$	11,808,328	$	1,362,100	$	10,446,228	3,275,828	$	11,086,986	$	879,766	$	10,207,220	2,988,484

		Current		$	7,137,644	$	798,224	$	6,339,420	2,111,764	$	6,358,698	$	358,351	$	6,000,347	1,762,849
		Non-current		$	4,670,684	$	563,876	$	4,106,808	1,164,064	$	4,728,288	$	521,415	$	4,206,873	1,225,635
Convertible notes payable - related party
2012	10%	Due on demand	$3.30	$	254,000	$	—	$	254,000	90,651	$	298,000	$	—	$	298,000	108,505
2015	10%	2 years	$4.50	320,000		—		320,000		75,900	320,000		—		320,000		72,354
				$	574,000	$	—	$	574,000	166,551	$	618,000	$	—	$	618,000	180,859

		Current		$	254,000	$	—	$	254,000	90,651	$	298,000	$	—	$	298,000	108,505
		Non-current		$	320,000	$	—	$	320,000	75,900	$	320,000	$	—	$	320,000	72,354
		Grand Total		$	22,468,848	$	1,788,591	$	20,680,257	3,442,379	$	19,128,039	$	879,766	$	18,248,273	3,169,343

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Cash flows for the six months ended June 30, 2016 and June 30, 2015

Net cash used in operating activities

Net cash flows used in operating activities increased by $0.2 million, or 5%, to $4.4 million from $4.2 million for the six months ended June 30, 2016 and 2015, respectively. This increase was primarily due to a $2.7 million increase in net loss partially offset by a $1.0 million increase of working capital, a $1.5 million increase in the non-cash adjustments to net loss. The increase in non-cash adjustments to net loss was primarily attributable to the following: $2.0 million for the change in the fair value of liability classified warrants and warrant derivative liabilities, $0.4 million for gain on derecognition of accounts payable and settlement of litigation and $0.4 million for a foreign exchange adjustment on notes payable, partially offset by a $1.2 million decrease in share-based compensation and a $0.1 million decrease in depreciation and amortization expense.

Net cash used in investing activities

Net cash flows used in investing activities remained approximately the same at around $2,000 for the six months ended June 30, 2016 and 2015, respectively. Net cash used in investing activities includes purchase of property and equipment.

Net cash from financing activities

Net cash flows from financing activities de creased by $1.0 million, or 19%, to $4.3 million from $5.3 million for the six months ended June 30, 2016 and 2015, respectively, as a result of an $1.8 million increase in proceeds of issuance of common stocks, partially offset by a $2.2 million decrease in proceeds from issuance of convertible and non-convertible promissory notes, a $0.5 million increase in repayment of convertible and non-convertible promissory notes and a $0.1 million decrease in proceeds from exercise of warrants.

Off-Balance-Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements.

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP, on the basis that the Company will continue as a going concern. Due to the uncertainty of the Company’s ability to meet its current operating and capital expenses, there is substantial doubt about the Company’s ability to continue as a going concern, as the continuation and expansion of its business is dependent upon obtaining further financing,

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successful and sufficient market acceptance of its products, and finally, achieving a profitable level of operations. The consolidated interim financial statements do not include any adjustments that might result from the outcome of these uncertainties. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Refer to “Critical Accounting Policies” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report for our critical accounting policies. There have been no material changes in any of our critical accounting policies during the six months ended June 30, 2016.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon this evaluation and due to the material weakness in our internal control over financial reporting as of December 31, 2015 described below, our Chief Executive Officer and Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures are not effective. Our management is working at remediating the material weakness in our internal controls over financial reporting. However, we have not yet completed a full annual accounting cycle since December 31, 2015 to fully validate the remediation of the material weakness in our internal controls and the effectiveness of the Company’s disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2016 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Material Weakness and Plan of Remediation

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses would permit information required to be disclosed by the Company in the reports that it files or submits to not be recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

We conducted an evaluation pursuant to Rule 13a-15 of the Exchange Act of the effectiveness of the design and operation of our internal control over financial reporting as of December 31, 2015. This evaluation was conducted under the supervision of our management, including our Chief Executive Officer, Chief Business Officer, Sr. Vice President of Finance, and the Interim Chief Financial Officer. Based on that evaluation, we have concluded that our internal control over financial reporting was not effective as of December 31, 2015 principally due to the continuance of a material weakness in our internal control over financial reporting, initially identified in our evaluations of the effectiveness of our internal control over financial reporting as of December 31, 2014 and 2013, with respect to the application of generally accepted accounting principles (GAAP) in the United States of America on certain complex transactions as well as maintaining effective controls over the completeness and accuracy of financial reporting for complex or unusual transactions. Further, as of mid-August 2015 through December 2015 we did not have a sufficient number of independent directors to constitute an audit committee.

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Our management and Board of Directors are committed to the remediation of the material weakness, as well as the continued improvement of our overall system of internal control over financial reporting. We are in the process of implementing measures to remediate the underlying causes of the control deficiency that gave rise to the material weakness, which primarily include engaging additional and supplemental internal and external resources with the technical expertise in US GAAP as well as to implement new policies and procedures to provide more effective controls to track, process, analyze, and consolidate the financial data and reports.

We believe these measures will remediate the control deficiencies that gave rise to a material weakness. As we continue to evaluate and work to remediate these control deficiencies, we may determine that additional remedial measures are required.

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Part II. Other Information

Item 1. Legal Proceedings

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on May 20, 2016 (the “Annual Report”), for a prior discussion of our legal proceedings.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of the Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On April 8, 2016, the Company issued a convertible note to a third party in the principal amount of $60,300, which bears interest at 10% per annum and matures on the two-year anniversary date of the note. If the Company completes a qualified public offering, the principal amount of the note will automatically convert into shares of the Company’s common stock at a conversion price equal to 80% of the initial public offering price in the qualified public offering. At or after the first anniversary of the loan date, the holder of the note may convert some or all of the unpaid principal amount thereof, including unpaid accrued interest, into shares of the Company’s common stock at a conversion price of $4.50 per share.

On April 18, 2016, the Company issued a convertible note to a third party in the principal amount of $49,860, which bears interest at 10% per annum and mature on the two-year anniversary date of the note. If the Company completes a qualified public offering, the principal amount of the note will automatically convert into shares of the Company’s common stock at a conversion price equal to 80% of the initial public offering price in the qualified public offering. At or after the first anniversary of the loan date, the holder of the note may convert some or all of the unpaid principal amount thereof, including unpaid accrued interest, into shares of the Company’s common stock at a conversion price of $4.50 per share.

On April 20, 2016, the Company issued a convertible note to a third party in the principal amount of $100,000, which bears interest at 10% per annum and mature on the two-year anniversary date of the note. If the Company completes a qualified public offering, the principal amount of the note will automatically convert into shares of the Company’s common stock at a conversion price equal to 80% of the initial public offering price in the qualified public offering. At or after the first anniversary of the loan date, the holder of the note may convert some or all of the unpaid principal amount thereof, including unpaid accrued interest, into shares of the Company’s common stock at a conversion price of $4.50 per share.

In connection with certain secured loans, the Company issued the lender warrants for the purchase of 62,500 shares of the Company’s common stock at an exercise price of the lowest of the fair market value of our common stock during the quarter ended June 30, 2016 or the lowest public sale price of our common stock during the quarter ended June 30, 2016. As these loans have been outstanding for more than 30 days during the 90-day period ending June 30, 2016, the Company accordingly issued the lender an additional warrant for the purchase of 37,500 shares of our common stock on the terms set forth above. These warrants may be exercised through a cashless feature.

On May 1, 2016, the Company modified a convertible note to a third party in the original principal amount of $656,052, which bears interest at 10% per annum. The maturity date of the loan was extended to October 1, 2016. The Company shall pay to a third party principal and interest on the first day of each month, for a period of five months, in the amount of $124,580.03 per month. In connection with the modification of the note, the Company issued five-year warrants to purchase 75,000 shares of common stock at a per share exercise price equal to $4.70 per share.

On May 12, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $400,000 with a new convertible note in the principal amount of $480,000 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On May 26, 2016, a holder of options exercised its right to purchase 10,000 shares of common stock using a cashless exercise feature. As a result of this cashless exercise, we issued 1,866 shares of our common stock to the holder of these options and withheld issuing 8,134 shares of our common stock in satisfaction of the exercise price under the option.

On May 29, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $200,257 with a new convertible note in the principal amount of $260,334 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $3.60 per share at any time during the term of this note upon election of the holder.

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On May 30, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $300,000 with a new convertible note in the principal amount of $360,000 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On June 2, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $378,000 with a new convertible note in the principal amount of $453,600 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On June 6, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $100,000 with a new convertible note in the principal amount of $120,000 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On June 9, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $272,000 with a new convertible note in the principal amount of $326,400 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On June 9, 2016, the Company refinanced a convertible note payable to a third party in the original principal amount of $70,000 with a new convertible note in the principal amount of $84,000 which bears interest at 10% per annum. The note has two year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

On June 16, 2016, the Company issued a convertible note to a third party in the original principal amount of $250,000 , which bears interest at 10% per annum. The note has a one year term. The principal amount plus any unpaid accrued interest due under the convertible note is convertible into shares of the Company’s common stock at $4.50 per share at any time during the term of this note upon election of the holder.

Except as explicitly noted above, all such securities were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act or, in the case of refinancings, upon the exemption from registration provided by Section 3(a)(9) of the Securities Act. These securities qualified for exemption under Section 4(a)(2) of the Securities Act because the issuance of securities by the Company did not involve a “public offering.” The issuance was not a public offering based upon the following factors: (i) a limited number of securities were issued to a limited number of offerees; (ii) there was no public solicitation; (iii) each offeree was an “accredited investor” as such term is defined by Rule 501 under the Securities Act; and (iv) the investment intent of the offerees. No underwriters were used in connection with such sales of unregistered securities.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

(a) Exhibits

Exhibit Number		Description of Document

4.1		Form of Convertible Promissory Note issued by the registrant to the persons indicated in Schedule A attached to the Form of Convertible Promissory Note

4.2		Form of Convertible Promissory Note issued by the registrant to the persons indicated in Schedule A attached to the Form of Convertible Promissory Note

4.3		Form of Warrant to Purchase Shares of Common Stock issued by the registrant to Agility Capital II, LLC

4.4		Form of Warrant to Purchase Shares of Common Stock issued by the registrant to Paul and Hisako Terasaki Trust

4.5		Form of Modification Agreement of Convertible Promissory Note dated May 1, 2016 by and between Emmaus Life Sciences, Inc. and Paul and Hisako Terasaki Trust

10.1		Form of Promissory Note issued by the registrant to the persons indicated in Schedule A attached to the Form of Promissory Note

10.2		Promissory Note dated April 14, 2016 by the registrant to The Shitabata Family Trust

10.3		Loan Agreement, dated as of April 18, 2016, between the registrant and Agility Capital II, LLC

10.4		Loan Agreement, dated as of May 13, 2016, between the registrant and Agility Capital II, LLC

31.1		Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

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EMMAUS LIFE SCIENCES, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Emmaus Life Sciences, Inc.


Dated: August 19, 2016	By:	/s/ Yutaka Niihara
	Name:	Yutaka Niihara, M.D., MPH
	Its:	Chief Executive Officer
		(principal executive officer and duly authorized officer)


	By:	/s/ Steve Lee
	Name:	Steve Lee
	Its:	Interim Chief Financial Officer
		(principal financial and accounting officer)

Exhibit 4.1

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES INTO WHICH IT MAY BE CONVERTED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). NO SALE OR DISPOSITION MAY BE AFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN APPLICABLE EXEMPTION THEREFROM.

EMMAUS LIFE SCIENCES , INC.

Convertible Promissory Note

Principal Amount:		Loan Date:

Currency:	U.S. Dollars	Term:	Two Years

Interest Rate:	10%	Loan Due Date:

Interest Payment Period: Interest is accrued and paid upon Loan Due Date

Lender:

FOR VALUE RECEIVED, Emmaus Life Sciences, Inc., a Delaware corporation, located at 21250 Hawthorne Blvd., Suite 800, Torrance, CA 90503 (“Borrower”) hereby promises to pay to the order of Lender the sum of the Principal Amount in the stated Currency, together with any accrued interest at the stated Interest Rate, under the following terms and conditions of this Convertible Promissory Note (“Note”).

1. Terms of Repayment (Balloon Payment) : The entire unpaid Principal Amount and any accrued interest shall become immediately due and payable upon the stated Loan Due Date. Simple interest at the stated Interest Rate will accrue on the outstanding Principal Amount commencing on the Loan Date of this Note and the Borrower shall make payments of interest only as per the stated Interest Payment Period.

2. Prepayment : This Note may be prepaid in whole or in part at any time after six months from the Loan Date without premium or penalty upon ten days advance written notice by Borrower to Lender. In the event such notice provides for prepayment on a date at or after the first anniversary of the Loan Date, Lender shall be permitted to exercise its conversion rights, if any, pursuant to Section 4(c) hereof at any time or from time to time prior to the expiration of such ten-day period. All prepayments shall first be applied to interest, and then to principal payments.

3. Place of Payment: All payments due under this Note shall be sent to the Lender’s address, as noted in Attachment 1 hereto, or at such other place as the Lender or subsequently assigned holder (“Holder”) of this Note may designate in writing in the future.

4. Conversion:

(a) Mandatory Conversion : Upon the first closing of the sale of shares of common stock of the Borrower (“Common Stock”) in a Qualifying Public Offering (as hereinafter defined), (i) the entire outstanding Principal Amount of this Note shall automatically be converted into a number of shares of Common Stock determined by dividing (x) the outstanding Principal Amount of this Note by (y) an amount equal to the product obtained by multiplying (A) the Qualifying Public Offering Price Per Share and (B) 0.80. Within thirty days of such closing, all accrued and unpaid interest on the Note will be paid to the Holder in cash. “Qualifying Public Offering” means a firm commitment public offering of shares of Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended, which results in aggregate cash proceeds to the Borrower of not less than $20,000,000; provided that in connection therewith the Common Stock is listed for trading on a national securities exchange; and provided further that the quoted market price per share of the Common Stock is at least $5.00 at the time of such listing. “Qualifying Public Offering Price Per Share” means the initial public offering price per share of Common Stock in such Qualifying Public Offering.

The Borrower shall notify the holder of this Note at least seven (7) calendar days prior to the initial closing of a Qualifying Public Offering. At the time of the initial closing of such Qualifying Public Offering, the holder of this Note shall deliver this Note to the Borrower and, as soon as reasonably practicable thereafter, the Borrower shall issue and deliver to the holder of this Note a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of this Note, and provision shall be made for any fraction of a share as provided in Section 4(b) below. At the time of the initial closing of the Qualifying Public Offering, and provided that the Borrower has complied fully with all of its obligations under this Section 4(a), the holder of this Note shall not have any further rights under this Note (including the right to receive payment of principal or interest hereunder) other than those rights set forth in this Section 4.

Lender agrees, if requested by the managing underwriter of such Qualifying Public Offering, to enter into an agreement not to sell or transfer any shares of Common Stock of the Company (excluding shares acquired in or following the Qualifying Public Offering), for a period of up to 180 days, plus such additional necessary to comply with applicable regulatory requirements, following the Qualifying Public Offering (provided all directors and officers of the Borrower agree to the same restrictions).

(b) Fractional Shares : No fractional shares or scrip shall be issued upon conversion of this Note. The number of full shares of Common Stock issuable upon conversion of this Note shall be computed on the basis of the aggregate value of outstanding principal of and, as applicable in accordance with the terms of this Section 4, accrued interest on this Note so surrendered. The value of any fractional shares of Common Stock shall be paid in cash.

(c) Conversion at the Election of the Holder : At or after the first anniversary of the Loan Date, Lender may by giving written Notice of Conversion to the Borrower in the form attached hereto as Exhibit A, elect to convert some or all of the unpaid Principal Amount, including up to all the interest accrued and unpaid thereon, into a number of shares of Common Stock determined by dividing (x) the outstanding Principal Amount of this Note by (y) the Conversion Price Per Share. As used in this Section 4(c), “Conversion Price Per Share” means

$4.50 per share of Common Stock (subject to appropriate adjustment in the event of any stock splits, stock dividends, recapitalizations and similar transactions with respect to the capital stock of Borrower). Within two weeks following receipt of such Notice of Conversion, Borrower shall deliver to Lender one or more original stock certificates representing the full number of shares of Common Stock issuable upon such conversion, and provision shall be made for any fraction of a share as provided in Section 4(b) above. Upon such conversion, and provided that the Borrower has complied fully with all of its obligations under this Section 4(c), the holder of this Note shall not have any further rights under this Note (including the right to receive payment of principal or interest hereunder) other than those rights set forth in this Section 4.

5 . Default: In the event of default, the Borrower agrees to pay all costs and expenses incurred by the Lender, including all reasonable attorney fees as permitted by law for the collection of this Note upon default.

6 . Acceleration of Debt: If the Borrower (i) fails to make any payment due under the terms of this Note or seeks relief under the U.S. Bankruptcy Code, (ii) fails to deliver shares to the Lender by the deadline set forth in Section 4 hereof, (iii) suffers an involuntary petition in bankruptcy or receivership that is not vacated within thirty (30) days, (iv) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official or such appointment is not discharged or stayed within 30 days, (v) makes a general assignment for the benefit of its creditors or (vi) admits in writing that it is generally unable to pay its debts as they become due, the entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.

7 . Modification: No modification or waiver of any of the terms of this Note shall be allowed unless by written agreement signed by the Borrower and the Lender. No waiver of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

8. Complete Note: This Note is the complete and exclusive statement of agreement of the Borrower and Lender with respect to matters in this Note. This Note replaces and supersedes all prior written or oral agreements or statements by and among the Borrower and Lender with respect to the matters covered by it. No representation, statement, condition or warranty not contained in this Note is binding on either the Borrower or Lender. Each Holder of this Note, by its acceptance hereof, agrees to be bound by, and shall be entitled to the benefits of, the terms set forth herein.

9 . Transfer of the Note:

(a) Subject to Section 9(b) hereof, t his Note may be transferred, in whole or in part, at any time or from time to time, by the Lender. The Borrower hereby agrees to remain bound by the terms of this Note subsequent to any such transfer, and agrees that the terms of this Note may be fully enforced by any subsequent holder of this Note. If this Note is to be transferred, the Lender shall surrender this Note to the Borrower, together with such additional documentation as the Lender may reasonably request, whereupon the Borrower will forthwith issue and deliver upon the order of the Lender a new Note registered as the Lender may request, representing the outstanding Principal Amount being transferred by the Lender and, if less then the entire outstanding Principal

Amount is being transferred, a new Note to the Lender representing the outstanding Principal Amount not being transferred. The person in whose name this Note or any new Note issued in replacement hereof shall be registered shall be deemed and treated as the owner and holder thereof, and the Borrower shall not be affected by any notice or knowledge to the contrary except as provided in this Section 9(a). This Note may not be transferred by the Borrower, by operation of law or otherwise, without the prior written consent of the Lender.

(b) Lender acknowledges and agrees that this Note has been acquired for investment and has not been registered under the securities laws of the United States of America or any state thereof. Accordingly, notwithstanding Section 9(a), neither this Note nor any interest thereon may be offered for sale, sold or transferred in the absence of registration under applicable federal and state securities laws or an opinion of counsel of the Holder reasonably satisfactory to the Borrower that such registration is not required.

10. Lost, Stolen or Mutilated Note: Upon receipt by the Borrower of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Lender to the Borrower in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrower shall execute and deliver to the Lender a new Note representing the outstanding Principal Amount and accrued and unpaid interest thereon.

11 . Remedies: The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Lender’s right to pursue actual and consequential damages for any failure by the Borrower to comply with the terms of this Note.

12 . Severability of Provisions : If any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.

13 . Reservation of Shares : The Borrower shall at all times at and after the first anniversary of the Loan Date and, as applicable, at the time of closing of Qualifying Public Offering reserve and keep available, free from preemptive rights, out of its authorized and unissued Common Stock the full number of shares of Common Stock then issuable upon the conversion in full of this Note.

14 . Choice of Law: All terms and conditions of this Note shall be interpreted under the laws of California, U.S.A., without regard to conflict of law principles.

Signed Under Penalty of Perjury, this day of ,

Emmaus Life Sciences, Inc.


By:

ATTACHMENT 1

Lender’s Name:

Lender’s Address:

EXHIBIT A

NOTICE OF CONVERSION

(To be executed by the Lender in order to convert the Note)

TO: Emmaus Life Sciences, Inc.

The undersigned hereby irrevocably elects to convert $ of the principal amount of the Note issued to the Lender by Emmaus Life Sciences, Inc. (the “Company”) into shares of Common Stock of the Company according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:

Applicable Conversion Price:

Signature:

Name:

Address:

Amount to be converted:	$

Amount of Note unconverted:	$

Number of shares of Common Stock to be issued:

Please issue the shares of Common Stock in the following name and to the following address:

Address:

Address:

Phone Number:

[INFORMATION FOR PURPOSES OF FILING WITH THE SECURITIES AND EXCHANGE COMMISSION]

SCHEDULE A

NOTEHOLDERS

Lender	Annual Interest Rate		Date of loan	Term of Loan	Loan Due Date	Principal Loan Amount		Interest Payment Period	Conversion Price
Taeseok Choi	10.0	%	04/08/2016	2 years	04/08/2018	$	60,300	Paid upon loan due date	$	4.50
Soo Young Choi	10.0	%	04/18/2016	2 years	04/18/2018	$	49,860	Paid upon loan due date	$	4.50
Sun Moo and Hyon Sil Lee	10.0	%	04/20/2016	2 years	04/20/2018	$	100,000	Paid upon loan due date	$	4.50

Exhibit 4.2

EMMAUS LIFE SCIENCES , INC.

Convertible Promissory Note

Principal Amount:		Loan Date:

Currency:		Term:

Interest Rate:		Loan Due Date:

Interest Payment Period:

Conversion Price per Share:

Lender:

FOR VALUE RECEIVED, Emmaus Life Sciences, Inc., a Delaware corporation, located at 21250 Hawthorne Blvd., Suite 800, Torrance, CA 90503 (“Borrower”) agrees to pay to Lender the sum of the Principal Amount in the stated Currency, together with any accrued interest at the stated Interest Rate, under the following terms and conditions of this Convertible Promissory Note (“Note”).

1. Terms of Repayment (Balloon Payment) and Conversion : The entire unpaid Principal Amount and any accrued interest shall become immediately due and payable upon the stated Loan Due Date. Simple interest at the stated Interest Rate will accrue on the outstanding Principal Amount commencing on the Loan Date of this Note and the Borrower shall make payments of interest only as per the stated Interest Payment Period.

At any time during the term of this Note, Lender shall by giving written Notice of Conversion to the Borrower in the form attached hereto as Exhibit A, have the right to convert some or all of the unpaid Principal Amount, including up to all the interest accrued and unpaid thereon, into shares of Common Stock of Borrower (the “Shares”) at the stated Conversion Price Per Share (subject to appropriate adjustment in the event of any stock splits, stock dividends, recapitalizations and similar transactions with respect to the capital stock of Borrower). Within two weeks following each conversion of this Note, Borrower shall deliver to Lender one or more original stock certificates representing the shares of common stock issued upon such conversion.

2. Prepayment : This Note may be prepaid in whole or in part at any time after six months from the Loan Date without premium or penalty upon ten days advance written notice by Borrower to Lender, provided that Lender shall be permitted to exercise its conversion rights pursuant to Section 1 hereof at any time or from time to time prior to the expiration of such ten-day period. All prepayments shall first be applied to interest, and then to principal payments.

3. Place of Payment: All payments due under this Note shall be sent to the Lender’s address, as noted in Attachment 1 hereto, or at such other place as the Lender or subsequently assigned holder of this Note may designate in writing in the future.

4 . Default: In the event of default, the Borrower agrees to pay all costs and expenses incurred by the Lender, including all reasonable attorney fees as permitted by law for the collection of this Note upon default.

5. Acceleration of Debt: If the Borrower (i) fails to make any payment due under the terms of this Note or seeks relief under the U.S. Bankruptcy Code, (ii) fails to deliver shares to the Lender by the deadline set forth in Section 4 hereof, (iii) suffers an involuntary petition in bankruptcy or receivership that is not vacated within thirty (30) days, (iv) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official or such appointment is not discharged or stayed within 30 days, (v) makes a general assignment for the benefit of its creditors or (vi) admits in writing that it is generally unable to pay its debts as they become due, the entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.

6. Modification: No modification or waiver of any of the terms of this Note shall be allowed unless by written agreement signed by the parties. No waiver of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

7. Complete Note: This Note is the complete and exclusive statement of agreement of the parties with respect to matters in this Note. This Note replaces and supersedes all prior written or oral agreements or statements by and among the parties with respect to the matters covered by it. No representation, statement, condition or warranty not contained in this Note is binding on the parties.

8. Transfer of the Note: This Note may be transferred, in whole or in part, at any time or from time to time, by the Lender. The Borrower hereby waives any notice of the transfer of this Note by the Lender or by any subsequent holder of this Note, agrees to remain bound by the terms of this Note subsequent to any transfer, and agrees that the terms of this Note may be fully enforced by any subsequent holder of this Note. If this Note is to be transferred, the Lender shall surrender this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Lender a new Note registered as the Lender may request, representing the outstanding Principal Amount being transferred by the Lender and, if less then the entire outstanding Principal Amount is being transferred, a new Note to the Lender representing the outstanding Principal Amount not being transferred. This Note may not be transferred by the Borrower, by operation of law or otherwise, without the prior written consent of the Lender.

9. Lost, Stolen or Mutilated Note: Upon receipt by the Borrower of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Lender to the Borrower in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrower shall execute and deliver to the Lender a new Note representing the outstanding Principal Amount and accrued and unpaid interest thereon.

10 . Remedies: The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Lender’s right to pursue actual and consequential damages for any failure by the Borrower to comply with the terms of this Note.

11 . Severability of Provisions : If any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.

12 . Insufficient Authorized Shares : The Borrower shall take all reasonable best action necessary to increase the Borrower’s authorized shares of common stock to an amount sufficient to allow Borrower to reserve the Required Reserve Amount for the Note.

13 . Choice of Law: All terms and conditions of this Note shall be interpreted under the laws of California, U.S.A., without regard to conflict of law principles.

Signed Under Penalty of Perjury, this day of ,

Emmaus Life Sciences, Inc.


By:

ATTACHMENT 1

Lender’s Name:

Lender’s Address:

EXHIBIT A

NOTICE OF CONVERSION

(To be executed by the Lender in order to convert the Note)

TO: Emmaus Life Sciences, Inc.

Conversion Date:

Applicable Conversion Price:

Signature:

Name:

Address:

Amount to be converted:	$

Amount of Note unconverted:	$

Number of shares of Common Stock to be issued:

Please issue the shares of Common Stock in the following name and to the following address:

Address:

Address:

Phone Number:

[INFORMATION FOR PURPOSES OF FILING WITH THE SECURITIES AND EXCHANGE COMMISSION]

SCHEDULE A

NOTEHOLDERS

Lender	Annual Interest Rate		Date of loan	Term of Loan	Loan Due Date	Principal Loan Amount		Interest Payment Period	Conversion Price
Ho Shun Mei Grace & Wan Luen Pak Eric	10.0	%	05/12/2016	2 years	05/12/2018	$	480,000	Paid upon loan due date	$	4.50
Wong Shuk Ching Judy	10.0	%	05/29/2016	2 years	05/29/2018	$	260,334	Paid upon loan due date	$	3.60
The Takemoto Family	10.0	%	05/30/2016	2 years	05/30/2018	$	360,000	Paid upon loan due date	$	4.50
Wong Shuk Ching Judy	10.0	%	06/02/2016	2 years	06/02/2018	$	453,600	Paid upon loan due date	$	4.50
Mayumi Yoshida	10.0	%	06/06/2016	2 years	06/06/2018	$	120,000	Paid upon loan due date	$	4.50
Wong Shuk Ching Judy	10.0	%	06/09/2016	2 years	06/09/2018	$	326,400	Paid upon loan due date	$	4.50
Young Kam Sang Marianne	10.0	%	06/09/2016	2 years	06/09/2018	$	84,000	Paid upon loan due date	$	4.50
Eastwind, ltd.	10.0	%	06/16/2016	2 years	06/16/2018	$	250,000	Paid upon loan due date	$	4.50

Exhibit 4.3

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND, EXCEPT AS OTHERWISE NOT REQUIRED PURSUANT TO THE TERMS OF THIS WARRANT, DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY OF SUCH COMPLIANCE.

WARRANT TO PURCHASE STOCK

Corporation:	EMMAUS LIFE SCIENCES, INC.
Number of Shares:	See below
Class of Stock:	See below
Initial Exercise Price:	See below
Issue Date:
Expiration Date:	June 30, 2021

THIS WARRANT CERTIFIES THAT, for good and valuable consideration , AGILITY CAPITAL II, LLC or its registered assignee (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares (the “Shares”) of common stock, par value $0.001 per share (the “Common Stock”) of EMMAUS LIFE SCIENCES, INC., a Delaware corporation (the “Company”) at the initial exercise prices per Share set forth herein, and as adjusted pursuant to Article 2 of this Warrant (the initial exercise price with respect to each tranche of warrants as so adjusted , the “Warrant Price”).

This Warrant is being issued to Holder in connection with that certain Loan Agreement by and between Agility Capital II, LLC (“Agility”) and the Company dated as of even date herewith and as amended from time to time (the “Loan Agreement”). The initial number of Shares issuable upon exercise of this Warrant as of June 30, 2016 is , with an exercise price per Share equal to the lowest of the FMV (as defined below) on March 31, 2016 or on June 30, 2016 or the lowest Public Sale Price between March 31, 2016 and June 30, 2016. In addition, if the Advances (defined in the Loan Agreement) have remained outstanding for at least thirty days during the ninety day period ending on each of the following dates (a “Measurement Date”), then the number of Shares issuable upon exercise of this Warrant shall automatically increase on such date by the number of shares listed below, with the applicable exercise price for such additional Shares set forth opposite the respective Measurement Dates listed below:

Measurement Date	Number of Additional Shares	Exercise Price
June 30, 2016		The lowest of the FMV on 3/31/2016 or 6/30/16 or the lowest Public Sale Price in the quarter ending June 30, 2016

September 30, 2016		The lowest of the FMV on 6/30/ 16 or 9130116 or the lowest Public Sale Price in the quarter ending on September 30, 2016

December 31, 2016		The lowest of the FMV on 9/30/ 16 or 12/31/16 or the lowest Public Sale Price in the quarter ending on December 31, 2016

For purposes of the foregoing, the “FMV” or “Fair Market Value” shall be (i) if the Shares are traded regularly in a national public market, the closing price of the Shares reported on the last business day of such calendar quarter, or (ii) if the Shares are not traded regularly in a national public market, the Fair Market Value shall be the per share value as of such date as reasonably determined by an independent appraiser as approved by the Board of Directors of the Company in good faith.

For purposes of the foregoing, “Public Sale Price” means the price per share paid by third party investors in cash purchases of the Common Stock other than Exempted Securities during the quarter ended on the applicable Measurement Date. “Exempted Securities” means (a) shares of Common Stock issued by reason of a dividend, stock split , split-up or other distribution on shares of Common Stock, (b) shares of Common Stock issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or

arrangement approved by the Board of Directors of the Company, (c) shares of Common Stock actually issued upon the exercise, conversion or exchange of options, warrants or other convertible securities, in each case provided such issuance is pursuant to the terms of such options, warrants or other convertible securities, (d) shares of Common Stock issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors of the Company, (e) shares of Common Stock issued pursuant to the acquisition of another entity by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved by Agility to the extent required under the Loan Agreement, and (f) shares of Common Stock issued in connection with sponsored research, collaboration, technology license, development , OEM, marketing or other similar agreements or strategic partnerships approved by the Board of Directors of the Company.

In addition to the foregoing, upon the occurrence of an Event of Default (as defined in and pursuant to Section 5(a) of the Loan Agreement), the number of Shares that may be acquired hereunder shall increase by an additional number of Shares equal to , and the exercise price for such additional Shares shall be: if the Shares are traded regularly in a national public market, the closing price of the Shares on the date of such Event of Default, otherwise, the exercise price shall be the fair market value in the most recent valuation (which shall be no more than 90 days prior to the date of the Event of Default) as reasonably determined by an independent appraiser as approved by the Board of Directors of the Company in good faith. Only one increase of Shares upon the occurrence of an Event of Default shall apply under this Warrant notwithstanding that multiple Events of Default have occurred under the Loan Agreement.

1. EXERCISE

1.1 Method of Exercise . Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix I to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company immediately available funds for the aggregate Warrant Price for the Shares being purchased, unless the Holder elects cashless exercise as provided below.

1.2 Cashless Exercise Right . In lieu of paying the Warrant Price for the Shares as specified in Section 1.1, Holder may satisfy its obligation to pay the Warrant Price through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share as of the exercise date. The fair market value of the Shares shall be determined pursuant to Section 1.3.

1.3 Fair Market Value . For the purposes of Section 1.2, if the Shares are traded regularly in a national public market, the fair market value of the Shares shall be the closing price of the Shares on the date immediately preceding the date when Holder delivers its Notice of Exercise to the Company; otherwise, the fair market value shall be the most recent valuation (which shall be no more than 90 days prior to the date of exercise) as reasonably determined by an independent appraiser as approved by the Board of Directors of the Company in good faith.

1.4 Delivery of Certificate and New Warrant . Promptly after Holder exercises this Warrant against consideration duly delivered (whether in cash or by cashless exercise), the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.

1.5 Replacement of Warrants . On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

2. ADJUSTMENTS TO THE SHARES .

2.1 Dividends . If the Company declares or pays a dividend on its capital stock or other securities, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the property to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend occurred.

2.2 Reclassification, Exchange or Substitution . Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events. Upon the closing of any Acquisition the successor entity shall assume the obligations of this Warrant, and then this Warrant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. For the purpose of this Warrant, “Acquisition” means any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

2.3 Adjustments for Combinations, Etc . If at any time while this Warrant, or any portion thereof, remains outstanding and unexpired, the outstanding Shares are reverse-split, combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares issuable upon exercise or conversion of this Warrant shall be proportionately decreased. If the outstanding Shares are split, combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased and the number of Shares issuable upon exercise of or conversion of this Warrant shall be proportionately increased.

2.4 No Impairment . The Company shall not, by amendment of its Articles/Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article against impairment. If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder’s rights under this Warrant, the Warrant Price shall be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.

2.5 Certificate as to Adjustments . Upon each adjustment of the Warrant Price or the Shares, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer or other authorized officer setting forth such adjustment and the facts upon which such adjustment is base and the Warrant Price in effect upon the date thereof and the type and number of Shares issuable under the Warrant on the date hereof.

3. REPRESENTATIONS AND COVENANTS OF THE COMPANY .

3.1 Representations and Warranties . The Company represents and warrants to the Holder that all Shares that may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances.

3.2 Notice of Certain Events . If the Company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional

shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; or (d) effectuate an Acquisition or otherwise merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate, dissolve or wind up, then, in connection with each such event, the Company shall give Holder (1) at least 7 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; or (2) in the case of the matters referred to in (c) and (d) above at least 7 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event).

3.3 Information Rights . So long as the Holder holds this Warrant , the Company shall deliver to the Holder (a) promptly after mailing, copies of all communiques to the shareholders of the Company (or notice to Holder that such communique is publicly available), (b) quarterly and annual financial statements of the Company when such statements are available, provided however that Company need not provide such information for any period in which Company has filed Form 10Q or Form 10K (as applicable) with the Securities and Exchange Commission.

4. MISCELLANEOUS.

4.1 Term . This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above.

4.2 Legends . This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT’), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND, EXCEPT AS OTHERWISE NOT REQUIRED PURSUANT TO THE TERMS OF THIS WARRANT, DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY OF SUCH COMPLIANCE.

4.3 Compliance with Securities Laws on Transfer . This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee. The Company shall have no obligation to effect, or cause its transfer agent to effect, any transfer of this Warrant or the Shares unless Holder provides the Company an opinion of counsel reasonably acceptable to the Company that such transfer is complies with applicable federal and state securities laws; provided , however that, unless otherwise required by the transfer agent in respect of the Company’s Common Stock, the Company agrees that it will not require an opinion of counsel with respect to (i) transactions under Rule 144 of the Act so long as the Holder delivers to the Company such representations and warranties sufficient to establish that such Shares may be transferred without restriction under Rule 144, or (ii) transfers or assignments to any affiliate of Holder, including any current and former limited or general partner or member of Holder.

4.4 Transfer Procedure . Subject to the provisions of Section 4.3, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly , upon conversion of the Shares, if any) by giving the Company written notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable), provided that no such notice shall be required for a transfer to an affiliate of Holder.

4.5 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

4.6 Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

4.7 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.

	EMMAUS LIFE SCIENCES, INC.


	By:
	Name:
	Title

APPENDIX 1

NOTICE OF EXERCISE

1. The undersigned hereby elects to purchase shares of the Common Stock, par value $.00 I per share, of EMMAUS LIFE SCIENCES, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

1. The undersigned hereby elects to exercise the attached Warrant into Shares on a cashless basis in the manner specified in Section 1.2 of the Warrant. This conversion is exercised with respect to of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2. Please issue a certificate or certificates representing said shares m the name of the undersigned or in such other name as is specified below:

Agility Capital II, LLC

Or Registered Assignee

3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws. The undersigned represents that it is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act of 1933, as amended.

Agility Capital II , LLC or Registered Assignee



(Signature)
Name:
Title:


(Date)

[INFORMATION FOR PURPOSES OF FILING WITH THE SECURITIES AND EXCHANGE COMMISSION]

SCHEDULE A

Warrants schedule - Agility Capital II, LLC

	Number of Additional Shares
Measurement Date	4/18/2016 Loan	5/13/2016 Loan	Exercise Price

Initial Warrants	50,000	12,500	The lowest of the FMV on 3/31/16 or 6/30/16 or the lowest Public Sale Price between March 31, 2016 and June 30, 2016

June 30, 2016	30,000	7,500	The lowest of the FMV on 3/31/16 or 6/30/16 or the lowest Public Sale Price in the quarter ending June 30, 2016

September 30, 2016	15,000	3,750	The lowest of the FMV on 6/30/16 or 9/30/16 or the lowest Public Sale Price in the quarter ending on September 30, 2016

December 3I , 2016	15,000	3,750	The lowest of the FMV on 9/30/16 or 12/31/16 or the lowest Public Sale Price in the quarter ending on December 31, 2016

Event of Default	25,000	6,250	If the Shares are traded regularly in a national public market, the closing price of the Shares on the date of such Event of Default, otherwise, the exercise price shall be the fair market value in the most recent valuation

Exhibit 4.4

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

Date of Issuance:	Void after:

May 1, 2016	May 1, 2021

EMMAUS LIFE SCIENCES, INC.

WARRANT TO PURCHASE SHARES OF

COMMON STOCK

FOR VALUE RECEIVED, Paul and Hisako Terasaki Trust (“ Holder ”), is entitled to purchase from the Company, subject to the provisions of this Warrant (“ Warrant ”), from Emmaus Life Sciences, Inc., a Delaware corporation (“Company”) , at any time not later than 5:00 P.M., Pacific Time on May 1, 2021 (the “ Expiration Date ”), 75,000 shares (the “ Warrant Shares ”) of the Company’s Common Stock, par value $0.001 per share (“ Common Stock ”) at a price per share equal to $4.70 (the “Exercise Price”). The Exercise Price and the number of Warrant Shares purchasable upon exercise of this Warrant shall be subject to adjustment from time to time as described herein.

1. Method of Exercise.

(a) Subject to compliance with the terms and conditions of this Warrant and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or from time to time, on or before the Expiration Date by the delivery (including, without limitation, delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit A (the “ Notice of Exercise ”), duly executed by the Holder, at the principal office of the Company, and as soon as practicable after such date, surrendering:

(i) this Warrant at the principal office of the Company, and

(ii) payment , (i) in cash (by check) or by wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder; or (iii) by a combination of (i) and (ii), of an amount equal to the product obtained by multiplying the number of shares of Common Stock being purchased upon such exercise by the then effective Exercise Price (the “ Exercise Amount ”):

(b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant is surrendered to the Company as provided above. The person or persons entitled to receive the Warrant Shares

issuable upon exercise of this Warrant shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on the date the Holder is deemed to have exercised this Warrant.

(c) As soon as practicable after the exercise of this Warrant in whole or in part, the Company at its expense will cause to be issued in the name of, and delivered to, the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct:

(i) a certificate or certificates for the number of Warrant Shares to which such Holder shall be entitled, and

(ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Shares equal to the number of such Warrant Shares described in this Warrant minus the number of such Warrant Shares purchased by the Holder upon all exercises made in accordance with this Section 1.

2. Representations and Warranties of the Company.

In connection with the transactions provided for herein, the Company hereby represents and warrants to the Holder that:

(a) Organization, Good Standing, and Qualification. The Company is a corporation duly organized , validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted . The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties .

(b) Authorization. Except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights, all corporate action has been taken on the part of the Company, its officers and directors necessary for the authorization, execution and delivery of this Warrant. The Company has taken all corporate action required to make all the obligations of the Company reflected in the provisions of this Warrant the valid and enforceable obligations they purport to be. The issuance of this Warrant will not be subject to preemptive rights of any stockholders of the Company. The Company has authorized sufficient shares of Common Stock to allow for the exercise of this Warrant.

3. Representations and Warranties of the Holder. In connection with the transactions provided for herein, the Holder hereby represents and warrants to the Company that:

(a) Authorization. Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization , or similar laws relating to or affecting the enforcement

of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(b) Purchase Entirely for Own Account. The Holder acknowledges that this Warrant is entered into by the Holder in reliance upon such Holder’s representation to the Company that the Warrant and the Warrant Shares (collectively, the “ Securities ”) will be acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Holder has no present intention of selling, granting any participation in or otherwise distributing the same. By acknowledging this Warrant, the Holder further represents that the Holder does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Securities.

(c) Disclosure of Information. The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to acquire the Securities. The Holder further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities.

(d) Investment Experience. The Holder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Holder also represents it has not been organized solely for the purpose of acquiring the Securities.

(e) Accredited Investor. The Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D, as presently in effect, as promulgated by the Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ Act ”).

(f) Restricted Securities. The Holder understands that the Securities are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act, only in certain limited circumstances. In this connection, Holder represents that it is familiar with Rule 144, as presently in effect, as promulgated by the SEC under the Act (“ Rule 144 ”), and understands the resale limitations imposed thereby and by the Act.

(g) Further Limitations on Disposition. The Holder, by acceptance hereof, agrees that, absent an effective registration statement filed with the SEC under the Act covering the disposition or sale of this Warrant or the Warrant Shares issued or issuable upon exercise hereof, as the case may be, and registration or qualification under applicable state securities laws, such Holder will not sell, transfer, pledge, or hypothecate any or all of this Warrant or such Warrant Shares, as the case may be, unless either (i) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such

registration is not required in connection with such disposition or (ii) the sale of such Securities is made pursuant to SEC Rule 144.

(h) Legends . It is understood that the Securities may bear the following or a similar legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”

4. Valid Issuance; Taxes . All Warrant Shares issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof. The Company shall not be required to pay any tax or other charge imposed in connection with any transfer involved in the issuance of any certificate for Warrant Shares in any name other than that of the Holder of this Warrant, and in such case the Company shall not be required to issue or deliver any stock certificate or security until such tax or other charge has been paid, or it has been established to the Company ‘s reasonable satisfaction that no tax or other charge is due.

5. Adjustment of Exercise Price and Number and Kind of Warrant Shares . The number and kind of Warrant Shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

(a) Subdivisions, Combinations and Other Issuances . If the Company shall at any time after the issuance but prior to the expiration of this Warrant subdivide its Common Stock, by split-up or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, the Exercise Price shall be proportionally decreased and the number of Warrant Shares issuable on the exercise of this Warrant shall be proportionately increased in the case of a subdivision or stock dividend. The Exercise Price shall be proportionally increased and the number of Warrant Shares issuable on the exercise of this Warrant shall be proportionately decreased in the case of a combination. Any adjustment under this Section 5(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

(b) Reclassification, Reorganization and Consolidation . In case of any reclassification , capital reorganization or change in the capital stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 5(a) above),

then, as a condition of such reclassification , reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities or property receivable in connection with such reclassification, reorganization or change by a holder of the same number and type of securities as were purchasable as Warrant Shares by the Holder immediately prior to such reclassification, reorganization or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities or property deliverable upon exercise hereof, and appropriate adjustments shall be made to the per-share Exercise Price payable hereunder, provided the aggregate Exercise Price shall remain the same.

(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of Warrant Shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the new Exercise Price and number of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

6. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect.

7. No Stockholder Rights. Prior to exercise of this Warrant , the Holder shall not be entitled to any rights of a stockholder with respect to the Warrant Shares, including (without limitation) the right to vote such Warrant Shares, receive dividends or other distributions thereon, exercise preemptive rights or be notified of stockholder meetings, and, except as otherwise provided in this Warrant, such Holder shall not be entitled to any stockholder notice or other communication concerning the business or affairs of the Company.

8. Restrictions on Transfer. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Act, or an exemption from such registration. Subject to such restrictions , the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer, properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.

9. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by and construed under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of California located in Los Angeles

County and the United States District Court for the Central District of California for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

10. Successors and Assigns . The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the holders hereof and their respective successors and assigns.

11. Titles and Subtitles . The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

12. Notices . Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b) if given by telex or facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (c) if given by mail, then such notice shall be deemed given upon the earlier of (i) receipt of such notice by the recipient or (ii) three days after such notice is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed as follows: if to the Holder, at its address as set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Holder or the Company may designate by ten days’ advance written notice to the other:

If to the Company:

Emmaus Life Sciences, Inc.

21250 Hawthorne Blvd., Suite 800

Torrance, CA 90503

Attn : Peter Ludlum, Chief Financial Officer

Fax: (310) 214-0075

With a copy to:

Nixon Peabody

555 West 5th St. 46 th Floor

Los Angeles, CA 90013

Attn: Matthew Grazier

Fax: (866) 216-9523

13. Expenses . If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

14. Entire Agreement; Amendments and Waivers . This Warrant and any other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. Nonetheless, any term of this Warrant may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Holder; or if this Warrant has been assigned in part, by the holders or rights to purchase a majority of the shares originally issuable pursuant to this Warrant.

15. Severability . If any provision of this Warrant is held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

IN WITNESS WHEREOF, the parties have executed this Warrant as of the date above written.

	EMMAUS LIFE SCIENCES, INC .


	By:
	Name:
	Title:

EXHIBIT A

NOTICE OF EXERCISE

EMMAUS LIFE SCIENCES, INC .

Attention: Chief Financial Officer

The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant, as follows:

shares of Common Stock pursuant to the terms of the attached Warrant at $ per share (the applicable Exercise Price as of the date of this Notice of Exercise) , and tenders herewith payment in cash of the Exercise Price of such Warrant Shares in full, together with all applicable transfer taxes, if any.

The undersigned hereby represents and warrants that Representations and Warranties in Section 3 of the Warrant are true and correct as of the date hereof.

HOLDER :

Date:			By:
			Name:
			Address:

Name in which shares should be registered:

Exhibit 4.5

MODIFICATION AGREEMENT
OF

CONVERTIBLE PROMISSORY NOTE

This Modification Agreement of Convertible Promissory Note (the “Modification”) is made as of May 1, 2016 by and between EMMAUS LIFE SCIENCES, INC., a Delaware corporation, located at 21250 Hawthorne Blvd., Suite 800, Torrance CA 90503 (hereafter “Borrower” or “Company”) and Yutaka Niihara, M.D., an individual (the “Guarantor”), on the one hand, and HISAKO TERASAKI, as Trustee of the PAUL AND HISAKO TERASAKI TRUST dated February 15, 1985, as amended and restated, as a successor in interest to Paul Terasaki (“Lender”), on the other hand.

RECITALS

1. Borrower executed that certain Convertible Promissory Note (the “Note”) in favor of Paul Terasaki, as Lender, on March 5, 2015, in the original principal amount of $656,052.05. As additional security to Lender, the Note is personally guaranteed by Guarantor.

2. Concurrently with the Note, Company issued a Warrant to Paul Terasaki to purchase 100,000 shares of common stock of the Company (the “Warrant”). The Expiration Date of the Warrant is March 5, 2020.

3. By an Assignment of Assets executed by Paul I. Terasaki and Hisako Terasaki on February 26, 2011, Paul I. Terasaki assigned all currently owned and after-acquired tangible and intangible personal property-including the Note, Warrant, and all prior agreements executed by and between Borrower and Lender-to the Trustees of the Paul and Hisako Terasaki Trust dated February 15, 1985, as amended and restated.

4. The Note became due and payable in full on November 1, 2015 (the “Maturity Date”). As of the date hereof, Borrower is in default and no payments have been made under the Note.

5. Paul I. Terasaki died on January 25, 2016. Hisako Terasaki, as Trustee of the Paul and Hisako Terasaki Trust, as assignee, is the holder of the Note and the Warrant.

6. The parties hereto desire to make certain modifications to the Note upon the terms and conditions described herein.

NOW, THEREFORE, in consideration of the mutual covenants of the parties, the parties hereto do hereby agree as follows:

1. Capitalized Terms . All capitalized terms used herein, unless otherwise defined, shall have the meanings ascribed to them in the Note.

2. Consent to Assignment . Borrower and Guarantor hereby consent to the assignment of the Note and Warrant by Paul Terasaki to the Paul and Hisako Terasaki Trust.

3. Confirmation of Outstanding Balance . The parties hereto acknowledge and agree that as of May 1, 2016, the outstanding balance of principal is $656,052.05, plus accrued unpaid interest of $76,030.14.

4. Modification of Warrant . Pursuant to Paragraph 6 of the Note, upon a default, Borrower is required to issue a Warrant to Lender for 25,000 shares of common stock of the Company, at $4.90 per share (the “Default Warrant”), but as of the date hereof the Default Warrant has not been issued. Lender hereby waives all rights to the Default Warrant, and in lieu of the Default Warrant, Borrower shall issue to Lender in connection with this Modification a Warrant to purchase 75,000 shares of common stock of the Company, at $4.70 per share (the “Modification Warrant”). Borrower represents that the purchase price of $4.70 per share is the current fair market value of the shares of the Company. The Date of Issuance of the Modification Warrant shall be as of May 1, 2016, and the Expiration Date shall be May 1, 2021. Borrower shall prepare all documents necessary to memorialize the issuance of the Modification Warrant described in this Paragraph 4.

5. Extension of Maturity D ate. The parties hereto agree that the payments otherwise due under the Note shall be modified as follows:

a. The Maturity Date of the loan shall be extended for a period of six (6) months to October 1, 2016, at which time the entire outstanding principal and accrued interest payable under the Note shall become due and payable in full.

b. Borrower shall make payments to Lender in six (6) equal monthly installments $124,580.03, beginning on May 1, 2016, in accordance with the amortization schedule attached hereto as Exhibit A .

c. In connection with such modification, Paragraph 1 of the Note shall be deleted in its entirety and the following shall be substituted therefor:

1. Terms of Repayment. Commencing on May 1, 2016, Borrower shall pay to Lender principal and interest on the first day of each month, for a period of six (6) months), in the amount of $124,580.03 per month. The entire unpaid balance of principal, and all accrued but unpaid interest thereon, shall become immediately due and payable on October 1, 2016 (the “Maturity Date”).

6. All Other Provisions of Convertible Promissory Note and Warrant to Purchase Shares of Common Stock Remain in Effect . Except as otherwise modified herein, all of the terms and provisions of the Note and Warrant shall remain in full force and effect and are ratified and confirmed in all respects.

7. Guaranty . As additional security to Lender, Guarantor hereby consents to the Modification and ratifies and confirms the Guaranty in all respects.

8. Binding Effect . This Modification, and all rights and obligations hereunder, shall be binding upon the parties hereto, and all of their respective successors-in-interest and assigns.

9. Governing L aw. This Modification shall be governed by and construed in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the parties hereto have executed this Modification as of the date first written above.

“Borrower”	“Lender”

EMMAUS LIFE SCIENCES, INC., a Delaware Corporation	PAUL AND HISAKO TERASAKI TRUST dated February 15, 1985, as amended and restated


By:	By:
		HISAKO TERASAKI, Trustee
Title:


“Guarantor”


YUTAKA NIIHARA, M.D., an individual

EXHIBIT A

04-20-16

Emmaus Conv Note

Starting Loan Amount:	$ 656,052.05	Loan Date:	03-05-2015
Amortization Method:	Normal, 365 D/Y	First Payment Date:	05-01-2016
Starting Interest Rate:	10.000%	Starting Accrual Rate:	0.000 %
Term of Loan:	6	Starting Payment Period:	Monthly

PMT	Due Date	Payment Amount		Interest		Principal		Balance
1	05-01-16	124,580. 03		76,030.14		48,549.89		607,502.16
2	06-01-16	124,580.03		5,159.61		119,420.42		488,081.74
3	07-01-16	124,580.03		4,011.63		120,568.40		367,513.34
4	08-01-16	124,580.03		3,121.35		121,458.68		246,054.66
5	09-01-16	124,580. 03		2, 089.78		122,490.25		123,564,41
6	10-01-16	124,580.01		1,015.60		123,564.41		0.00
2016 totals		747,480.16		91,428.11		656,052.05
Grand totals		$	747,480.16	$	91,428.11	$	656,052.05

Exhibit 10.1

EMMAUS LIFE SCIENCES , INC.

Promissory Note

Principal Amount:		Loan Date:

Currency:	US dollar	Term:

Interest Rate:	11.0%	Loan Due Date:

Interest Payment Period: Annually

Lender:

2. Prepayment : This Note may be prepaid in whole or in part at any time after six months of the Loan Date without premium or penalty. All prepayments shall first be applied to interest, and then to principal payments.

3. Place of Payment: All payments due under this Note shall be sent to the Lender’s address, as noted in Attachment 1 hereto, or at such other place as the Lender or subsequently assigned holder of this Note may designate in writing in the future.

5 . Acceleration of Debt: If the Borrower (i) fails to make any payment due under the terms of this Note or seeks relief under the U.S. Bankruptcy Code, (ii) fails to deliver shares to the Lender by the deadline set forth in Section 4 hereof, (iii) suffers an involuntary petition in bankruptcy or receivership that is not vacated within thirty (30) days, (iv) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official or such appointment is not discharged or stayed within 30 days, (v) makes a general assignment for the benefit of its creditors or (vi) admits in writing that it is generally unable to pay its debts as they become due, the

entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.

6 . Modification: No modification or waiver of any of the terms of this Note shall be allowed unless by written agreement signed by the parties. No waiver of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

8 . Transfer of the Note: This Note may be transferred, in whole or in part, at any time or from time to time, by the Lender. The Borrower hereby waives any notice of the transfer of this Note by the Lender or by any subsequent holder of this Note, agrees to remain bound by the terms of this Note subsequent to any transfer, and agrees that the terms of this Note may be fully enforced by any subsequent holder of this Note. If this Note is to be transferred, the Lender shall surrender this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Lender a new Note registered as the Lender may request, representing the outstanding Principal Amount being transferred by the Lender and, if less then the entire outstanding Principal Amount is being transferred, a new Note to the Lender representing the outstanding Principal Amount not being transferred. This Note may not be transferred by the Borrower, by operation of law or otherwise, without the prior written consent of the Lender.

11 . Severability of Provisions : If any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.

12 . Choice of Law: All terms and conditions of this Note shall be interpreted under the laws of California, U.S.A., without regard to conflict of law principles.

Signed Under Penalty of Perjury, this day of ,

Emmaus Life Sciences, Inc.


By:

ATTACHMENT 1

Lender’s Name:

Lender’s Address:

[INFORMATION FOR PURPOSES OF FILING WITH THE SECURITIES AND EXCHANGE COMMISSION]

SCHEDULE A

NOTEHOLDERS

Lender	Annual Interest Rate		Date of loan	Term of Loan	Loan Due Date	Principal Loan Amount		Interest Payment Period	Conversion Price
Hope International Hospice, Inc.	10.0	%	04/04/2016	2 years (1)	04/04/2018	$	50,000	Annually	$	N/A
Willis C. Lee	10.0	%	04/08/2016	Due on demand	Due on demand	$	79,700	Annually	$	N/A
Lan T. Tran	10.0	%	04/29/2016	Due on demand	Due on demand	$	20,000	Annually	$	N/A
IRA Services Trust Company CFBO Peter B Ludlum	10.0	%	05/05/2016	Due on demand	Due on demand	$	10,000	Annually	$	N/A
Ho Shun Mei Grace & Wan Luen Pak Eric	11.0	%	05/31/2016	Due on demand	Due on demand	$	200,000	Annually	$	N/A
Winnie Suihim Chan	11.0	%	06/02/2016	Due on demand	Due on demand	$	100,000	Annually	$	N/A
Hope International Hospice, Inc.	10.0	%	06/03/2016	Due on demand	Due on demand	$	250,000	Annually	$	N/A

(1) Due on demand up to 2 years

Exhibit 10.2

EMMAUS LIFE SCIENCES , INC.

Promissory Note

Principal Amount:	$250,000	Loan Date:	April 14, 2016

Currency:	U.S. dollars	Term:	Six Months

Interest Rate:	11% per year	Loan Due Date:	October 14, 2016

Interest Payment Period: Interest is payable as of October 14, 2016

Lender: The Shitabata Family Trust

3. Place of Payment: All payments due under this Note shall be sent to the Lender’s address, as noted in Attachment 1 hereto, or at such other place as the Lender or subsequently assigned holder of this Note may designate in writing in the future.

entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.

11 . Severability of Provisions : If any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.

12 . Choice of Law: All terms and conditions of this Note shall be interpreted under the laws of California, U.S.A., without regard to conflict of law principles.

13 . Additional Guarantor: Lender understands and acknowledges that Emmaus Life Sciences, Inc. is the borrower of this Note. However, for added security to lender, this note is guaranteed by Yutaka Niihara, M.D., CEO.

Signed Under Penalty of Perjury, this 14th day of April, 2016

Emmaus Life Sciences, Inc.



By:



By:

ATTACHMENT 1

Lender’s Name:		The Shitabata Family Trust

Lender’s Address:


Loan Amount:		USD $250,000

Quarterly Interest at 11% Per Annum on Loan Amount:		$13,750.00

Maturity Date:		10/14/2016

Exhibit 10.3

LOAN AGREEMENT

Dated as of April 18, 2016

by and between

AGILITY CAPITAL II, LLC

as “Agility” or “Lender”

and

EMMAUS LIFE SCIENCES, INC.

as “Borrower”

TOTAL CREDIT AMOUNT: Up to $1,035,000

Maturity Date:	May 1, 20 17, subject to Section l {t)
Formula:	None
Facility Origination Fee:	$35,000
Interest:	I 0% per annum; fixed
Warrants:	See Warrant for coverage

The information set forth above is subject to the terms and conditions set forth in the balance of this Loan Agreement (this “Agreement “). The parties agree as follows:

1. Advances and Payments.

(a) Advance. Borrower may request one advance in the aggregate principal amount of $1,035,000 which shall be loaned on or around the date of this Agreement (the “Advance”). Agility’s obligation to make any portion of the Advance under this Agreement is subject to (i) Agility’s determination , in its sole discretion, that there has not occurred (A) a Material Adverse Effect, (B) a material impairment of Borrower ‘s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or (C) a material adverse change in the value of the Collateral; and (ii) the execution, delivery and filing of such certificates, instruments and agreements, as Agility deems appropriate, in form and substance satisfactory to Agility, including but not limited to (A) a warrant to purchase stock; (B) an intellectual property security agreement; (C) an unconditional guarantee by Yutaka Niihara and Soorni Niihara (the “Individual Guarantors”); (D) a deed of trust (“Deed of Trust”) with respect to the property located at 27916 Alvarez Drive, Rancho Palos Verdes, CA 90275 (the “Real Property”); and (E) an unconditional guarantees by Emmaus Medical, Inc. and Newfield Nutrition Corporation (the “Subsidiary Guarantors” and together with the Individual Guarantors, the “Guarantors”).

(b) Interest. Borrower shall pay interest on the outstanding principal balance of the Advance at a fixed rate per annum equal to ten percent (10.0%). Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed, shall accrue from the date of an Advance and continue until such Advance has been repaid, and shall be payable in arrears on the first day of each month until such Advance has been repaid.

(c) Payments. Borrower shall make interest-only payments on the first day of each month as set forth in Section I (b) above. Any partial month shall be prorated on the basis of a 30-day month based on the actual number of days outstanding. All payments made to Agility shall be made via wire transfer per wire transfer instructions separately provided by Agility to Borrower or by automated clearing house (ACH) transfer. All payments received by Agility shall be applied first to outstanding fees and expenses owing to Agility, then to accrued and unpaid interest, then to principal. Any fees or interest not paid when due shall be compounded by becoming a part of the Obligations, and such fees or interest shall thereafter accrue interest at the applicable interest rate.

(d) Prepayment. Borrower may prepay all but not less than all of the Advance, provided Borrower (i) provides written notice to Lender of its election to prepay the Advance at least ten (10) days prior to such prepayment , and (ii) pays to the Lender on the date of such prepayment an amount equal to the sum of (A) all outstanding principal of the Advance plus accrued and unpaid interest thereon through the prepayment date, (B) a fee equal to $35,000 minus the aggregate amount of interest paid by Borrower prior to the prepayment date (if such amount of interest already paid by Borrower is less than $35,000), plus (C) any other amounts due to Lender under this Agreement all of Lender’s fees and expenses incurred in connection with this Agreement) .

(e) Fees. On the date hereof, Borrower shall pay to Agility an origination fee of $35,000, which is fully earned and nonrefundable, and shall be deducted from the initial proceeds of the initial Advance. Borrower shall pay Agility a loan management fee of $835 per month, payable in arrears on the first day of each month, each of which are fully earned and nonrefundable on each such date.

(0 Maturity Date. All amounts outstanding hereunder are due and payable on the earlier of (i) the closing of any new debt financing of Borrower (other than financings or refinancings of Permitted Debt) occurring after the date hereof or (ii) May 1, 2017 (the “Maturity Date”).

(g) Late Payments; Default Interest; Default Fees. After the occurrence of an Event of Default under Section 5(a) of this Agreement, the Obligations shall bear interest at a rate equal to 15%. In addition, upon the occurrence of such Event of Default, Borrower shall pay Agility a default fee of $5,000. For each 30 day period in which the Event of Default remain s outstanding and uncured to Agility’s satisfaction, Borrower shall pay Agility an additional default fee of $5,000 for the first 30 day period, and an additional $5,000 for each 30 day period thereafter, until such Event of Default is cured or waived in writing by Agility. The terms of this paragraph shall not be construed as Agility’s consent to Borrower’s failure to pay any amounts in strict accordance with this Agreement, and Agility’s charging any fees and/or acceptance of any payments shall not restrict Agility’s exercise of any remedies arising out of any such failure.

(h) Use of Proceeds. The proceeds from the Advance shall be used for Borrower’s general corporate purposes.

2. Security Interest. As security for all present and future indebtedness, guarantees, liabilities, and other obligations of Borrower to Agility under this Agreement and any other present or future agreement, document, or instrument entered into in connection herewith (collectively, the “Transaction Documents”), including all fees specified in Section 1 (collectively, the “Obligations”), Borrower grants Agility a security interest in all of Borrower’s personal property, whether now owned or hereafter acquired, including without limitation the property described on Exhibit A attached hereto, and all products, proceeds and insurance proceeds of the foregoing (collectively, the “Collateral”). Borrower authorizes Agility to execute such documents and take such actions as Agility reasonably deems appropriate from time to time to perfect or continue the security interest granted hereunder. Agility agrees to take such action as may be reasonably requested by the Borrower, at Borrower’s expense, to evidence termination of Agility’s security interests upon the payment and performance of the Obligations in full, including the filing of UCC termination statements upon the payment and performance of the Obligations in full.

3. Representations, Warranties and Covenants. Borrower represents to Agility as follows (which shall be deemed continuing throughout the term of this Agreement, including the dates each portion of the Advance is made):

(a) Authorization. The execution, delivery and performance by Borrower of the Transaction Documents, and all other documents contemplated hereby have been duly and validly authorized by all necessary corporate action, and do not violate Borrower ‘s Articles of Incorporation or by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property.

(b) State of Incorporation; Places of Business; Locations of Collateral. Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which it is required to do so. The address set forth in this Agreement under Borrower’s signature is Borrower’s chief executive office. Other than the chief executive office, as of the date of this Agreement the tangible Collateral is located at the address(es) set forth on Exhibit B, and the Borrower shall promptly provide Agility with written notice of any other location where tangible Collateral may be located from time to time.

(c) Title to Collateral; Permitted Liens. Borrower is now, and will at all times in the future be, the sole owner of all the Collateral. The Collateral now is and will remain free and clear of any and all liens, security interests, encumbrances and adverse claims, except for (i) purchase money security interests in specific items of equipment; (ii) leases of specific items of equipment; (iii) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Lender’s security interests; (iv) l iens of materialmen, mechanics, warehousemen , carriers, or other similar liens arising in the ordinary course of business and securing obligations that are not delinquent; and (v) licenses pursuant to which Borrower or any of its subsidiaries licenses any intellectual property which Borrower or such subsidiary has the right to use; (vi) the liens under this Agreement and the other loan documents evidencing the Obligations; and (vii) the liens set forth on Exhibit B, if any.

(d) Financial Condition, Statements and Reports. The financial statements provided to Agility by Borrower have been prepared in all material respects in accordance with generally accepted accounting principles, consistently applied (“GAAP”). Except as set forth on Exhibit B, all financial statements now or in the future delivered to Agility will fairly reflect in all material respects the financial condition of Borrower, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Agility and the date hereof, there has been no circumstance or event that would reasonably be expected to have a material adverse change in the business, operations, results of operations, assets, liabilities or financial or other condition of Borrower taken as a whole (a “Material Adverse Effect”). Borrower has timely filed, and will timely file, all material tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all material applicable taxes, assessmen.ts, deposits and contributions now or in the future owed by Borrower except for any such taxes that are being contested in good faith.

(e) Compliance with Law. Borrower has complied, and will comply, with all provisions of all material applicable laws and regulations, except in each case where the failure to comply could not reasonably be expected to constitute or give rise to a Material Adverse Effect.

(f) Information. Except as set forth on Exhibit B, all written information provided to Agility by or on behalf of Borrower on or prior to the date of this Agreement is true and correct in all material respects when considered as a whole, and no representation or other statement made by Borrower to Agility contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Agility not misleading at the time made.

(g) Litigation. Except as disclosed on Exhibit B, there is no claim or litigation pending or (to best of Borrower ‘s knowledge) threatened against Borrower. Borrower will promptly inform Agility in writing of any claim or litigation in the future.

(h) Subsidiaries; Investments. Except as disclosed on Exhibit B, Borrower has no wholly-owned or partially owned subsidiaries, and Exhibit B sets forth all loans by Borrower to, and all investments by Borrower in, any person, entity, corporation partnership or joint venture.

(i) Deposit and Investment Accounts. Borrower maintains only the operating, savings, deposit, securities and investment accounts listed on Exhibit B. Within 90 days after the date hereof, Borrower shall deliver to Lender an account control agreement with Union Bank in form and substance satisfactory to Lender; and if requested by Lender, Borrower shall cause each Subsidiary Guarantor to execute and deliver account control agreement(s) with respect to its accounts, in form and substance satisfactory to Lender. Notwithstanding, the foregoing, Borrower and its subsidiaries may maintain accounts that are not subject to any account control agreement as long as the balances in all such accounts do not exceed $50,000 individually or $150,000 in the aggregate at any time.

(j) Real Property. The maximum principal amount of indebtedness owing by Individual Guarantors on the first mortgage on the Real Property as of the date hereof is no more than $70,000.

4. Other Covenants.

(a) Reports. Borrower will provide to Agility in form and substance acceptable to Agility (i) within forty five (45) days after the last day of each calendar quarter after the date hereof, quarterly financial statements, prepared in all material respects in accordance with GAAP, consistently applied; (ii) within fifteen (15) days after the last day of each month, copies of all reports and statements received by Borrower from any of its banks or other financial institutions (in lieu of such requirement, Borrower may grant Agility on-line “view only” access to all of its accounts on terms acceptable to Agility); (iii) annual financial statements prepared in all material respects in accordance with GAAP, consistently applied, by an independent certified public accountant acceptable to Agility, and copies of Borrower ‘s tax returns for such year, within one hundred twenty (120) days of the last day of such year; and (iv) upon request, such other information relating to Borrower’s operations and condition, as Agility may reasonably request from time to time. Agility acknowledges that Borrower does not presently have complete financial statements for the quarters ended June 30, 2015, September 30, 2015 or December 31, 2015 or for the year ended December 31, 2015. Agility shall have the right to review and copy Borrower’s books and records and audit and inspect the Collateral, from time to time, upon reasonable notice to Borrower. Agility or its officers, employees, or agents shall have a right to visit Borrower’s premises and interview Borrower’s officers at Borrower’s expense.

(b) Insurance. Borrower will maintain insurance on the Collateral and Borrower’s business, in amounts and of a type equivalent to insurance maintained by Borrower on the date of this Agreement, and promptly (and in any event within 5 days following the execution of this Agreement) Agility will be named in a lender’s loss payable endorsement in favor of Agility, in form reasonably acceptable to Agility.

(c) Other Negative Covenants. Without Agility’s prior written consent, Borrower shall not do any of the following: (i) acquire any material assets outside the ordinary course of business; (ii) sell, lease, license, encumber, transfer or otherwise dispose of any Collateral except for sales of inventory in the ordinary course of

business; (iii) pay or declare any dividends on Borrower’s stock; (iv) redeem , repurchase or otherwise acquire, any of Borrower ‘s stock; (v) except as provided on Exhibit B, make any investments in, or loans or advances to, any person, including without limitation any investments in, or downstreaming of funds to, any subsidiary or affiliate of Borrower; (vi) incur any indebtedness, including any guaranties or other contingent liabilities, other than (I) trade debt and equipment purchase money financing and/or capital lease obligations, each incurred in the ordinary course of business; and (2) unsecured convertible indebtedness on substantially similar terms as that which is existing as of the date hereof under which no interest or principal payments are due prior to the Maturity Date (collectively set forth on Exhibit B, “Permitted Debt”); (vii) make any deposits or investments into any investment or depository accounts unless they are subject to an account control agreement acceptable to Agility; (viii) make any payment on any of Borrower ‘s indebtedness that is subordinate to the Obligations (for the avoidance of doubt, the Borrower shall be permitted to make payments when due on the Permitted Debt that is outstanding as of the date hereof); (ix) permit or suffer a merger, change of control, or acquisition of all or any substantial part of Borrower’s assets; (x) use any part of the Advance to repay loans or pay deferred salaries or other amounts owing to any officers, directors, shareholders or affiliates of Borrower, other than repayments of the Permitted Debt that is outstanding as of the date hereof to debtors that may also be shareholders of Borrower; or (xi) agree to do any of the foregoing.

5. Events of Default. Any one or more of the following shall constitute an Event of Default under this Agreement:

(a) Borrower shall fail to pay any principal or interest due hereunder within ten days after the date due, provided that any amounts due on the Maturity Date shall be paid on that date, with no grace period; or

(b) Borrower shall fail to comply with any other provision of this Agreement or any other Transaction Document; or

(c) Any warranty or representation, report or certificate made or delivered to Agility by Borrower or on Borrower’s behalf pursuant to this Agreement or any of the Transaction Documents is or shall be untrue or misleading in a material respect as of the date given or made; or

(d) A default or event of default occurs in any other agreement to which Borrower is subject or by which Borrower is bound (i) resulting in a right by the other party or parties, whether or not exercised, to accelerate the maturity of any indebtedness of Borrower in an amount of more than $100,000 or (ii) that could have a Material Adverse Effect, as defined below; or

(e) Any portion of Borrower’s assets is attached, seized or levied upon, or a judgment for more than $100,000 is awarded against Borrower and is not stayed within ten days; or

(f) Dissolution or termination of existence of Borrower; or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by or against Borrower under any reorganization, bankruptcy, insolvency, arrangement , readjustment of debt, dissolution or liquidation law or statute of any jurisdiction , now or in the future in effect (except that, in the case of a proceeding commenced against Borrower, Borrower shall have 60 days after the date such proceeding was commenced to have it dismissed, provided Agility shall have no obligation to make any Advance during such period); or

(g) If the approvals from any governmental agency (including the FDA) is revoked, rescinded, suspended or modified in an adverse manner or if any litigation is commenced against Borrower, and such actions or litigation could reasonably be expected to have a Material Adverse Effect, or cause a material impairment of Borrower’s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or material adverse change in the value of the Collateral; or

(h) If any guaranty of all or a portion of the Obligations (a “Guaranty”), if any, ceases for any reason to be in full force and effect or if any Guarantor fails to satisfy any payment obligations under the Guaranty; or

(i) If any Guarantor fails to perform any obligation (other than any payment obligations), or any event of default occurs, under any Guaranty and the Guarantor shall not cure such failure or event of default within thirty days after notice of such failure or event of default from the Lender or Guarantor becomes aware of such failure or event of default, or if any of the circumstances described in clauses (c) through (f) above occur with respect to any Guarantor or any Individual Guarantor dies or becomes subject to any criminal prosecution ; or

(i) If the Deed of Trust ceases for any reason to be in full force and effect, or any event of default occurs under the Deed of Trust, or the amount owing under the existing mortgage on the Real Property exceeds $70,000.

6. Remedies.

(a) Remedies. Following the occurrence and during the continuance of any Event of Default, Agility, at its option, may do any one or more of the following: (i) Accelerate and declare the Obligations to be immediately due, payable, and performable; (ii) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Agility to enter Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge by Borrower for so long as Agility reasonably deems it necessary in order to complete the enforcement of its rights under this Agreement or any other Transaction Document; provided , however, that should Agility seek to take possession of any of the Collateral by Court process, Borrower hereby waives: (A) any bond and any surety or security relating thereto; (B) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (C) any requirement that Agility retain possession of, and not dispose of, any such Collateral until after trial or final judgment ; (iii) Require Borrower to assemble any or all of the Collateral and make it available to Agility at places designated by Agility; (iv) Complete the processing of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Agility shall have the right to use Borrower ‘s premises, equipment and all other property without charge by Borrower; (v) Collect and dispose of and realize upon any investment property, including withdrawal of any and all funds from any deposit or securities accounts; (vi) Dispose of any of the Collateral, at one or more public or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale; and (vii) Demand payment of, and collect any accounts, general intangibles or other Collateral and, in connection therewith, Borrower irrevocably authorizes Agility to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, and, in Agility’s good faith business judgment, to grant extensions of time to pay, compromise claims and settle accounts, general intangibles and the like for less than face value; Borrower grants Agility a license, exercisable from and after an Event of Default has occurred, to use and copy any trademarks, service marks and other intellectual property in which Borrower has an interest to effect any of the foregoing remedies. All reasonable attorneys ‘ fees, expenses, costs, liabilities and obligations incurred by Agility with respect to the foregoing shall be added to and become part of the Obligations, and shall be due on demand.

(b) Application of Proceeds. All proceeds realized as the result of any sale or other disposition of the Collateral shall be applied by Agility first to the reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Agility in the exercise of its rights under this Agreement or any other Transaction Document, second to any fees and Obligations other than interest and principal, third to the interest due upon any of the Obligations, and fourth to the principal of the Obligations, in such order as Agility shall determine in its sole discretion. Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Agility for any deficiency.

(c) Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement, Agility shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Agility and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by Agility of one or more of its rights or remedies shall not be deemed an election, nor bar Agility from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay of Agility to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed.

(d) Power of Attorney. After the occurrence and during the continuance of an Event of Default, Borrower irrevocably appoints Agility (and any of Agility’s designated employees or agents) as Borrower ‘s true and lawful attorney in fact to: endorse Borrower’s name on any checks or other forms of payment; make, settle and adjust all claims under and decisions with respect to Borrower’s policies of insurance; settle and adjust disputes and claims respecting accounts, general intangibles and other Collateral; execute and deliver all notices, instruments and agreements in connection with the perfection of the security interest granted in this Agreement; sell, lease or otherwise dispose of all or any part of the Collateral; and take any other action or sign any other documents required to be taken or signed by Borrower, or reasonably necessary to enforce Agility’s rights or remedies or otherwise carry out the purposes of this Agreement and the other Transaction Documents. The appointment of Agility as Borrower’s attorney in fact, and each of Agility’s rights and powers, being coupled with an interest, are irrevocable until all Obligations owing to Agility have been paid and performed in full.

7. Waivers. The failure of Agility at any time or times to require Borrower to strictly comply with any of the provision s of this Agreement or any other Transaction Document between Borrower and Agility shall not waive or diminish any right of Agility later to demand and receive strict compliance therewith . Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other agreement shall be deemed to have been waived except by a specific written waiver signed by an authorized officer of Agility. Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, general intangible, document or guaranty at any time held by Agility on which Borrower is or may in any way be liable, and notice of any action taken by Agility, unless expressly required by this Agreement.

8. Indemnity. Borrower shall indemnify Agility for all out-of-pocket costs or liabilities, including reasonable attorneys’ fees, incurred by Agility in connection with this Agreement or any other Transaction Document.

9. Confidentiality. In handling any confidential non-public information provided to Agility by Borrower, Agility agrees not to disclose such information to any other person, and Agility shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of the same, except that disclosure of such information may be made (i) to subsidiaries or affiliates of Agility in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Obligations, provided that they have entered into a comparable confidentiality agreement with respect thereto, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Agility, and (v) as Agility may deem appropriate in connection with the exercise of any remedies hereunder. Confidential information shall not include information that either: (a) is in the public domain, or becomes part of the public domain, after disclosure to Agility through no fault of Agility; or (b) is disclosed to Agility by a third party, provided Agility does not have knowledge, after reasonable inquiry, that such third party is prohibited from disclosing such information.

10. Governing Law; Jurisdiction; Venue. The Transaction Documents, all acts and transactions under the Transaction Documents, and all rights and obligations of Agility and Borrower shall be governed by the internal laws (and not the conflict of laws rules) of the State of California. As a material part of the consideration to Agility to enter into this Agreement, each of Borrower and Lender (i) agrees that all actions and proceedings relating directly or indirectly to the Transaction Documents shall be litigated in courts located within California, and the venue therefor shall be Santa Barbara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.

11. MUTUAL WAIVER OF JURY TRIAL. BORROWER AND AGILITY EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN AGILITY AND BORROWER INCLUDING ALL OTHER TRANSACTION DOCUMENTS, OR ANY CONDUCT, ACTS OR OMISSIONS OF AGILITY OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH AGILITY OR BORROWER, IN ALL OF THE

FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. IF THIS JURY WAIVER IS FOR ANY REASON UNENFORCEABLE, THE PARTIES AGREE TO RESOLVE ALL CLAIMS, CAUSES AND DISPUTES THROUGH JUDICIAL REFERENCE PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 638 ET SEQ BEFORE A MUTUALLY ACCEPTABLE REFEREE SITTING WITHOUT A JURY OR, IF NO AGREEMENT ON THE REFEREE IS REACHED, BEFORE A REFEREE SELECTED BY THE PRESIDING JUDGE OF THE CALIFORNIA SUPERIOR COURT FOR SANTA BARBARA COUNTY. THIS PROVISION SHALL NOT RESTRICT A PARTY FROM EXERCISING NONJUDICIAL REMEDIES UNDER THE CODE.

12. Representations of Lender. Lender represents and warrants, as of the date hereof and as of any exercise of the Warrant, that: (i) it is acquiring the Warrant and any Shares (as defined therein) upon the exercise thereof solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities Jaws, and (ii) Lender is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act of 1933, as amended. The representations and warranties contained in this Section 12 shall survive the termination of this Agreement and the repayment of the Obligations until the Warrant has been fully exercised or has fully expired.

13. General. This Agreement and the other Transaction Documents are the final, entire and complete agreement between Borrower and Agility and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement and the other Transaction Documents. There are no oral understandings, representations or agreements between the parties which are not set forth in the Transaction Documents. The terms and provisions of this Agreement or any other Transaction Document may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Agility. Agility may assign all or any part of its interest in this Agreement or any other Transaction Document and the Obligations to any person or entity, or grant a participation in, or security interest in, any interest in this or any other Transaction Document, without notice to or consent of Borrower. Borrower may not assign any rights under or interest in this Agreement or any other Transaction Document without Agility’s prior written consent.

13. Publicity. At any time after Borrower’s next filing with the Securities and Exchange Commission in which this Agreement is disclosed, Agility may use Borrower’s tradenames and logos in Agility’s marketing materials in respect of the transactions evidenced by this Agreement.

14. Lender’s License. This loan is made pursuant to the California Finance Lenders Law, Division 9 (commencing with Section 22000) of the Financial Code. Agility Capital II, LLC, 812 Anacapa Street, Suite A, Santa Barbara, CA 93101, License Number 603 H822. FOR INFORMATION CONTACT THE DEPARTMENT OF CORPORATIONS, STATE OF CALIFORNIA.

AGILITY CAPITAL II, LLC			EMMAUS LIFE SCIENCES, INC.


By:			By:

Title:			Title:

Address for notices:		Address for notices:

Agility Capital II, LLC		Emmaus Life Sciences, Inc.
812 Anacapa Street, Suite A		20725 S. Western Avenue, Suite 136
Santa Barbara, CA 93101		Torrance, California 9050 I
Attn:		Attn:
Fax:		Fax:

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), commercial tort claims, deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including copyrights, patents, trademarks, goodwill and all intellectual property, payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time.

EXHIBIT B

Places of Business a nd Locations of Collateral (Section 3(b)):

Headquarters - 21250 Hawthorne Boulevard, Suite 800, Torrance, California 90503

3870 Del Amo Blvd., Suite 506, Torrance, California 90503

Magellean Storage at 4320 W. 190th Street, Torrance, California 9050

In addition, EM Japan leases 1,322 total square feet of office space in Tokyo, Japan and 1,313 square feet of office space in Osaka, Japan.

Permitted L iens (Section 3(c})

Mitsubishi UFJ Capital III Limited Partnership (Mitsubishi) has a $500,000 convertible note issued with the Company. The Mitsubishi note is secured by 39,250 shares of CellSeed, Inc. which is held by Mitsubishi as collateral.

F inancial Statements (Section 3(d))

Financial statements for the period ending June 30, 2015 and September 30, 2015 have not yet been filed in part due to legal proceedings and changes in the composition of the Board of Directors. In December 2015 an independent Board of Directors was re-established and in January 2016 a new audit firm was engaged. The Company is proceeding to file the financial reports for the period ending June 30, 2015 and September 30, 2015 when the audit of the year ending December 31, 2015 is complete.

Information (Section 3 (f))

See Section 3(d) above.

Litigation (Section 3(g)):

None

Subsidiaries and partnerships and joint ventures (Section 3(h)):

Subsidiaries: Emmaus Medical, Inc., Newfield Nutrition Corporation, Emmaus Medical Japan, Inc. and Emmaus Medical Europe Ltd. The Borrower is also in the process of forming or otherwise acquiring a subsidiary in Korea,and the formation or acquisition of said subsidiary shall not be a violation of this representation or a default under the Loan Agreement. Joint ventures: On December 28, 2015, the Borrower entered into a collaboration agreement with Korea Bio Medical Science Institute (“ KBMSI ”) pursuant to which, among other things, the Borrower agreed to form a joint steering committee to assess potential joint research , development and commercialization opportunities and to potentially jointly develop intellectual property pursuant to further written agreements to be determined. In addition, the collaboration agreement provides that Borrower and KBMSI will enter into a stock swap agreement pursuant to which the Borrower would exchange Four Billion Korean Won of Borrower ‘s common stock for Four Billion Korean Won of KBMSI stock.

Permitted Debt Section 4(c)(vi):

Year Issued	Interest Rate Range	Term of Notes	Conv. Price	Principal Outstanding December 31, 2015		Discount Amount December 31, 2015		Carrying Amount December 31, 2015

Convertible notes Payable
2010	6%	5 years	$3.05		2,000	$	—	$	2,000
2011	10%	5 years	$3.05	500,000				500,000
2013	10%	2 years	$3.60	525,257				525,257
2014	10%	Due on demand – 2 years	$3.05-$7.00	4,378,563		353,700		4,024,863
2015	10%	Due on demand – 2 years	$3.05-$7.00	5,681,166		526,066		5,155,100
				$	11,086,986	$	879,766	$	10,207,220
		Current		$	6,358,698	$	358,351	$	6,000,347
		Long-term		$	4,728,288	$	521,415	$	4,206,873

Convertible notes Payable – related party
2012	10%	Due on demand	$3.30	$	298,000	$	—	$	298,000
2014	10%	2 years	$7.00
2015	10%	2 years	$4.50	320,000				320,000
				$	618,000	$	—	$	618,000
		Current		$	298,000	$	—	$	298,000
		Long-term		$	320,000	$	—	$	320,000

Notes payable
2013	10%	Due on demand	NA	$	830,000	$	—	$	830,000
2014	11%	Due on demand – 2 years	NA	1,446,950				1,446,950
2015	11%	Due on demand – 2 years	NA	2,379,799				2,379,799
				$	4,656,749	$	—	$	4,656,749
		Current		$	4,656,749	$		$	4,656,749
		Long-term		$	—	$		$

Notes Payable–related party
2012	8% – 10%	Due on demand	NA	$	626,730	$		$	626,730
2013	8%	Due on demand	NA	50,000				50,000
2014	11%	Due on demand – 2 years	NA	240,308				240,308
2015	10% – 11%	Due on demand – 2 years	NA	1,849,266				1,849,266
				$	2,766,304	$		$	2,766,304
		Current		$	2,766,304	$		$	2,766,304
		Long-term		$		$		$
		Grand Total		$	19,128,039	$	879,766	$	18,248,273

Subsequent to the year ended December 31, 2015, the Company issued the following:

Notes issued after December 31, 2015	Principal Amounts		Annual Interest Rates	Term of Notes	Conversion Price
Convertible notes (1)	$	489,950	10%	2 Years	$	4.50
Promissory note-related party	700,000		10%-11%	Due on Demand
Total	$	1,189,950

Investments of Borrower (Section 4(c)(v)):

Borrower owns 39,250 shares of CellSeed, Inc.

Accounts (Section 3(i))

ELSI & EMI:

ELSI - Union Bank - MM 0214

ELSI - Union Bank - Chk 7150

Union Bank MM - 9562

Union Bank Priority Chk 1200

Checking at CommerceWest Bank 0025

Short-Term lnvestments:Merrill Lynch MM 7742

NNC:

CommerceWest CHK 0017

Checking at Union Bank 7659

CORPORATE RESOLUTIONS AND INCUMBENCY CERTIFICATE

Borrower : EMMAUS LIFE SCIENCES, INC.

I, the undersigned Secretary or Assistant Secretary of EMMAUS LIFE SCIENCES, INC. (the “Company”), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware.

I FURTHER CERTIFY that attached hereto as Attachments l and 2 are true and complete copies of the Certificate of incorporation and Bylaws of the Corporation, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that by unanimous written consent of the Directors of the Company (or by other duly authorized corporate action in lieu of a meeting), the following resolutions were adopted.

“BE IT RESOLVED, that any one (I) of the following named officers, employees, or agents of this Company (the “Authorized Officers”), whose actual signatures are shown below:

NAMES	POSITION	ACTUAL SIGNATURES

Yutaka Niihara	President and Chief Executive Officer

Peter Ludlum	Chief Financial Officer

Willis Lee	Chief Operating Officer

Lan Tran	Chief Administrative Officer and Secretary

acting for and on behalf of this Company and as its act and deed be, and they hereby are, authorized and empowered:

Borrow Money. To borrow from time to time from Agility, on the terms set forth in that Loan Agreement between the Company and Agility containing the terms set forth in the Term Sheet (the “Loan Agreement “), with such changes therein as may be approved by any Authorized Officer, his or her execution thereof to represent the conclusive approval and authorization of this Board, such sum or sums of money as in their judgment should be borrowed pursuant to the Loan Agreement.

Execute Agreement. To execute and deliver to Agility the Loan Agreement, and any other agreement, document or instrument entered into in connection with the Agreement, and also one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for one or more of the loans, or any portion of the loans.

Grant Security. To grant a security interest to Agility in the Collateral described in the Loan Agreement , which security interest shall secure all of the Company’ s obligations, as described in the Loan Agreement.

Issue Warrants. To issue one or more warrants to purchase the capital stock of the Company to Agility.

Further Acts. To designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Agility may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Agility. Any such notice shall not affect any of the Corporation ‘s agreements or commitments in effect at the time notice is given.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand as of April 18, 2016 and attest that the signatures set opposite the names listed above are their genuine signatures.

	CERTIFIED AND ATTESTED BY:


	By
	Name:
	Title:

Exhibit 10.4

LOAN AGREEMENT

Dated as of May 13, 2016

by and between

AGILITY CAPITAL II, LLC

as “Agility” or “Lender”

and

EMMAUS LIFE SCIENCES, INC.

as “Borrower”

TOTAL CREDIT AMOUNT: Up to $260,000

Maturity Date:	May 1, 2017, subject to Section I (f)
Formula:	None
Facility Origination Fee:	$10,000
Interest:	10% per annum; fixed
Warrants:	See Warrant for coverage

The information set forth above is subject to the terms and conditions set forth in the balance of this Loan Agreement (this “Agreement”). The parties agree as follows:

1. Advances and Payments .

(a) Advance . Borrower may request one advance in the aggregate principal amount of $260,000 which shall be loaned on or around the date of this Agreement (the “Advance”). Agility’ s obligation to make any portion of the Advance under this Agreement is subject to (i) Agility’s determination , in its sole discretion, that there has not occurred (A) a Material Adverse Effect, (B) a material impairment of Borrower’ s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or (C) a material adverse change in the value of the Collateral; and (ii) the execution, delivery and filing of such certificates, instruments and agreements, as Agility deems appropriate, in form and substance satisfactory to Agility, including but not limited to (A) a warrant to purchase stock; (B) an unconditional guarantee by Yutaka Niihara and Soomi Niihara (the “Individual Guarantors”); and (C) a deed of trust (“Deed of Trust”) with respect to the property located at 24 Covered Wagon Lane, Rolling Hills Estates, CA 90274 (the “Real Property”).

(b) Interest . Borrower shall pay interest on the outstanding principal balance of the Advance at a fixed rate per annum equal to ten percent (10.0%). Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed, shall accrue from the date of an Advance and continue until such Advance has been repaid, and shall be payable in arrears on the first day of each month until such Advance has been repaid.

(c) Payments . Borrower shall make interest-only payments on the first day of each month as set forth in Section 1(b) above. Any partial month shall be prorated on the basis of a 30-day month based on the actual number of days outstanding. All payments made to Agility shall be made via wire transfer per wire transfer instructions separately provided by Agility to Borrower or by automated clearing house (ACH) transfer. All payment s received by Agility shall be applied first to outstanding fees and expenses owing to Agility, then to accrued and unpaid interest, then to principal. Any fees or interest not paid when due shall be compounded by becoming a part of the Obligations, and such fees or interest shall thereafter accrue interest at the applicable interest rate.

(d) Prepayment . Borrower may prepay all but not less than all of the Advance, provided Borrower (i) provides written notice to Lender of its election to prepay the Advance at least ten (10) days prior to such prepayment , and (ii) pays to the Lender on the date of such prepayment an amount equal to the sum of (A) all outstanding principal of the Advance plus accrued and unpaid interest thereon through the prepayment date, (B) a fee equal to $5,000 minus the aggregate amount of interest paid by Borrower prior to the prepayment date (if such amount of interest already paid by Borrower is less than $5,000), plus (C) any other amounts due to Lender under this Agreement all of Lender’s fees and expenses incurred in connection with this Agreement).

(e) Fees . On the date hereof, Borrower shall pay to Agility an origination fee of $10,000, which is fully earned and nonrefundable, and shall be deducted from the initial proceeds of the initial Advance. Borrower shall pay Agility a loan management fee of $200 per month, payable in arrears on the first day of each month, each of which are fully earned and nonrefundable on each such date.

(f) Maturity Date . All amounts outstanding hereunder are due and payable on the earlier of (i) the closing of any new debt financing of Borrower (other than financings or refinancings of Permitted Debt) occurring after the date hereof or (ii) May 1, 2017 (the “Maturity Date”).

(g) Late Payments ; Default Interest ; Default Fees. After the occurrence of an Event of Default under Section 5(a) of this Agreement, the Obligations shall bear interest at a rate equal to 15%. In addition, upon the occurrence of such Event of Default, Borrower shall pay Agility a default fee of $1,250. For each 30 day period in which the Event of Default remains outstanding and uncured to Agility’s satisfaction, Borrower shall pay Agility an additional default fee of $1,250 for the first 30 day period, and an additional $1,250 for each 30 day period thereafter, until such Event of Default is cured or waived in writing by Agility. The terms of this paragraph shall not be construed as Agility’s consent to Borrower’s failure to pay any amounts in strict accordance with this Agreement, and Agility’s charging any fees and/or acceptance of any payments shall not restrict Agility’s exercise of any remedies arising out of any such failure.

(h) Use of Proceeds . The proceeds from the Advance shall be used for Borrower’s general corporate purposes.

2. Security Interest . As security for all present and future indebtedness, guarantees, liabilities, and other obligations of Borrower to Agility under this Agreement and any other present or future agreement, document, or instrument entered into in connection herewith (collectively, the “Transaction Documents”), including all fees specified in Section 1 (collectively, the “Obligations”), Borrower grants Agility a security interest in all of Borrower’ s personal property, whether now owned or hereafter acquired, including without limitation the property described on Exhibit A attached hereto, and all products, proceeds and insurance proceeds of the foregoing (collectively, the “Collateral”). Borrower authorizes Agility to execute such documents and take such actions as Agility reasonably deems appropriate from time to time to perfect or continue the security interest granted hereunder. Agility agrees to take such action as may be reasonably requested by the Borrower, at Borrower’s expense, to evidence termination of Agility’s security interests upon the payment and performance of the Obligations in full, including the filing of UCC termination statements upon the payment and performance of the Obligations in full.

3. Representations, Warranties and Covenants . Borrower represents to Agility as follows (which shall be deemed continuing throughout the term of this Agreement , including the dates each portion of the Advance is made):

(a) Authorization. The execution, delivery and performance by Borrower of the Transaction Document s, and all other documents contemplated hereby have been duly and validly authorized by all necessary corporate action, and do not violate Borrower’s Articles of 1ncorporation or by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property.

(b) State of Incorporation ; Places of Business; Locations of Collateral . Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which it is required to do so. The address set forth in this Agreement under Borrower’s signature is Borrower’s chief executive office. Other than the chief executive office, as of the date of this Agreement the tangible Collateral is located at the address(es) set forth on Exhibit B , and the Borrower shall promptly provide Agility with written notice of any other location where tangible Collateral may be located from time to time.

(c) Title to Collateral ; Permitted Liens . Borrower is now, and will at all times in the future be, the sole owner of all the Collateral. The Collateral now is and will remain free and clear of any and all liens, security interests, encumbrances and adverse claims, except for (i) purchase money security interests in specific items of equipment; (ii) leases of specific items of equipment; (iii) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings , provided the same have no priority over any of Lender’s security interests; (iv) liens of materialmen , mechanics, warehousemen , carriers, or other similar liens arising in the ordinary course of business and securing obligations that are not delinquent; and

(v) licenses pursuant to which Borrower or any of its subsidiaries licenses any intellectual property which Borrower or such subsidiary has the right to use; (vi) the liens under this Agreement and the other loan documents evidencing the Obligations; and (vii) the liens set forth on Exhibit B , if any.

(d) Financial Condition, Statements and Reports . The financial statements provided to Agility by Borrower have been prepared in all material respects in accordance with generally accepted accounting principles, consistently applied (“GAAP”). Except as set forth on Exhibit B, all financial statements now or in the future delivered to Agility will fairly reflect in all material respects the financial condition of Borrower, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Agility and the date hereof, there has been no circumstance or event that would reasonably be expected to have a material adverse change in the business, operations, results of operations, assets, liabilities or financial or other condition of Borrower taken as a whole (a “Material Adverse Effect”). Borrower has timely filed, and will timely file, all material tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all material applicable taxes, assessments, deposits and contributions now or in the future owed by Borrower except for any such taxes that are being contested in good faith.

(e) Compliance with Law . Borrower has complied, and will comply, with all provisions of all material applicable laws and regulations, except in each case where the failure to comply could not reasonably be expected to constitute or give rise to a Material Adverse Effect.

(f) Information . Except as set forth on Exhibit B , all written information provided to Agility by or on behalf of Borrower on or prior to the date of this Agreement is true and correct in all material respects when considered as a whole, and no representation or other statement made by Borrower to Agility contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Agility not misleading at the time made.

(g) Litigation . Except as disclosed on Exhibit B , there is no claim or litigation pending or (to best of Borrower’s knowledge) threatened against Borrower. Borrower will promptly inform Agility in writing of any claim or litigation in the future.

(h) Subsidiaries ; Investments . Except as disclosed on Exhibit B , Borrower has no wholly-owned or partially owned subsidiaries, and Exhibit B sets forth all loans by Borrower to, and all investments by Borrower in, any person, entity, corporation partnership or joint venture.

(i) Deposit and Investment Accounts . Borrower maintains only the operating, savings, deposit, securities and investment accounts listed on Exhibit B . Within 90 days after the date hereof, Borrower shall deliver to Lender an account control agreement with Union Bank in form and substance satisfactory to Lender; and if requested by Lender, Borrower shall cause each Subsidiary Guarantor to execute and deliver account control agreement(s) with respect to its accounts, in form and substance satisfactory to Lender. Notwithstanding , the foregoing, Borrower and its subsidiaries may maintain accounts that are not subject to any account control agreement as long as the balances in all such accounts do not exceed $50,000 individually or $150,000 in the aggregate at any time.

(j) Real Property . The maximum principal amount of indebtedness owing by Individual Guarantors on the first mortgage on the Real Property as of the date hereof is no more than $1,330,000.

4. Other Covenants .

(a) Reports . Borrower will provide to Agility in form and substance acceptable to Agility (i) within forty five (45) days after the last day of each calendar quarter after the date hereof, quarterly financial statements, prepared in all material respects in accordance with GAAP, consistently applied; (ii) within fifteen (15) days after the last day of each month, copies of all reports and statements received by Borrower from any of its banks or other financial institutions (in lieu of such requirement, Borrower may grant Agility on-line “view only” access to all of its accounts on terms acceptable to Agility); (iii) annual financial statements prepared in all material respects in accordance with GAAP, consistently applied, by an independent certified public accountant acceptable to Agility, and copies of Borrower’s tax returns for such year, within one hundred twenty (120) days of the last day of such year; and

(iv) upon request, such other information relating to Borrower’s operations and condition, as Agility may reasonably request from time to time. Agility acknowledges that Borrower does not presently have complete financial statements for the quarters ended June 30, 2015, September 30, 2015 or December 31, 2015 or for the year ended December 31, 2015. Agility shall have the right to review and copy Borrower’s books and records and audit and inspect the Collateral, from time to time, upon reasonable notice to Borrower. Agility or its officers, employees, or agents shall have a right to visit Borrower’s premises and interview Borrower’s officers at Borrower’s expense.

(b) Insurance . Borrower will maintain insurance on the Collateral and Borrower’s business, in amounts and of a type equivalent to insurance maintained by Borrower on the date of this Agreement, and promptly (and in any event within 5 days following the execution of this Agreement) Agility will be named in a lender’s loss payable endorsement in favor of Agility, in form reasonably acceptable to Agility.

(c) Other Negative Covenants . Without Agility’s prior written consent, Borrower shall not do any of the following : (i) acquire any material assets outside the ordinary course of business; (ii) sell, lease, license, encumber, transfer or otherwise dispose of any Collateral except for sales of inventory in the ordinary course of business; (iii) pay or declare any dividends on Borrower’s stock; (iv) redeem, repurchase or otherwise acquire, any of Borrower’s stock;(v) except as provided on Exhibit B , make any investments in, or loans or advances to, any person, including without limitation any investments in, or downstreaming of funds to, any subsidiary or affiliate of Borrower; (vi) incur any indebtedness, including any guaranties or other contingent liabilities, other than (I) trade debt and equipment purchase money financing and/or capital lease obligations, each incurred in the ordinary course of

business; and (2) unsecured convertible indebtedness on substantially similar terms as that which is existing as of the date hereof under which no interest or principal payments are due prior to the Maturity Date (collectively set forth on Exhibit B, “Permitted Debt”); (vii) make any deposits or investments into any investment or depository accounts unless they are subject to an account control agreement acceptable to Agility; (viii) make any payment on any of Borrower’s indebtedness that is subordinate to the Obligations (for the avoidance of doubt, the Borrower shall be permitted to make payments when due on the Permitted Debt that is outstanding as of the date hereof);(ix) permit or suffer a merger, change of control, or acquisition of all or any substantial part of Borrower’s assets; (x) use any part of the Advance to repay loans or pay deferred salaries or other amounts owing to any officers, directors, shareholders or affiliates of Borrower, other than repayments of the Permitted Debt that is outstanding as of the date hereof to debtors that may also be shareholders of Borrower; or (xi) agree to do any of the foregoing.

5. Events of Default. Any one or more of the following shall constitute an Event of Default under this Agreement:

(a) Borrower shall fail to pay any principal or interest due hereunder within ten days after the date due, provided that any amounts due on the Maturity Date shall be paid on that date, with no grace period; or

(b) Borrower shall fail to comply with any other provision of this Agreement or any other Transaction Document; or

(c) Any warranty or representation , report or certificate made or delivered to Agility by Borrower or on Borrower’s behalf pursuant to this Agreement or any of the Transaction Documents is or shall be untrue or misleading in a material respect as of the date given or made; or

(d) A default or event of default occurs in any other agreement to which Borrower is subject or by which Borrower is bound (including Borrower’s loan agreement with Lender dated as of April 18, 2016) (i) resulting in a right by the other party or parties, whether or not exercised, to accelerate the maturity of any indebtedness of Borrower in an amount of more than $100,000 or (ii) that could have a Material Adverse Effect, as defined below; or

(e) Any portion of Borrower’s assets is attached, seized or levied upon, or a judgment for more than $100,000 is awarded against Borrower and is not stayed within ten days; or

(f) Dissolution or termination of existence of Borrower; or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by or against Borrower under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction , now or in the future in effect (except that, in the case of a proceeding commenced against Borrower, Borrower shall have 60 days after the date such proceeding was commenced to have it dismissed, provided Agility shall have no obligation to make any Advance during such period); or

(g) If the approvals from any governmental agency (including the FDA) is revoked, rescinded , suspended or modified in an adverse manner or if any litigation is commenced against Borrower, and such actions or litigation could reasonably be expected to have a Material Adverse Effect, or cause a material impairment of Borrower’s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or material adverse change in the value of the Collateral; or

(h) If any guaranty of all or a portion of the Obligations (a “Guaranty”), if any, ceases for any reason to be in full force and effect or if any Guarantor fails to satisfy any payment obligations under the Guaranty; or

(i) If any Guarantor fails to perform any obligation (other than any payment obligations), or any event of default occurs, under any Guaranty and the Guarantor shall not cure such failure or event of default within thirty days after notice of such failure or event of default from the Lender or Guarantor becomes aware of such failure or event of default, or if any of the circumstances described in clauses (c) through (f) above occur with respect to any Guarantor or any Individual Guarantor dies or becomes subject to any criminal prosecution; or

(i) If the Deed of Trust ceases for any reason to be in full force and effect, or any event of default occurs under the Deed of Trust, or the amount owing under the existing mortgage on the Real Property exceeds $1,330,000.

6. Remedies.

(a) Remedies. Following the occurrence and during the continuance of any Event of Default, Agility, at its option, may do any one or more of the following: (i) Accelerate and declare the Obligations to be immediately due, payable, and performable; (ii) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Agility to enter Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge by Borrower for so long as Agility reasonably deems it necessary in order to complete the enforcement of its rights under this Agreement or any other Transaction Document ; provided , however, that should Agility seek to take possession of any of the Collateral by Court process, Borrower hereby waives: (A) any bond and any surety or security relating thereto; (B) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (C) any requirement that Agility retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (iii) Require Borrower to assemble any or all of the Collateral and make it available to Agility at places designated by Agility; (iv) Complete the processing of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Agility shall have the right to use Borrower’s premises, equipment and all other property without charge by Borrower; (v) Collect and dispose of and realize upon any investment property, including withdrawal of any and all funds from any deposit or securities accounts; (vi) Dispose of any of the Collateral, at one or more public or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale; and (vii) Demand payment of, and collect any accounts, general intangibles or other Collateral and, in connection therewith, Borrower irrevocably authorizes Agility to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, and, in Agility’s good faith business judgment , to grant extensions of time to pay, compromise claims and settle accounts, general intangibles and the like for less than face value; Borrower grants Agility a license, exercisable from and after an Event of Default has occurred, to use and copy any trademarks, service marks and other intellectual property in which Borrower has an interest to effect any of the foregoing remedies . All reasonable attorneys’ fees, expenses, costs, liabilities and obligations incurred by Agility with respect to the foregoing shall be added to and become part of the Obligations, and shall be due on demand.

(b) Application of Proceeds. All proceeds realized as the result of any sale or other disposition of the Collateral shall be applied by Agility first to the reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Agility in the exercise of its rights under this Agreement or any other Transaction Document, second to any fees and Obligations other than interest and principal, third to the interest due upon any of the Obligations, and fourth to the principal of the Obligations, in such order as Agility shall determine in its sole discretion. Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Agility for any deficiency.

(c) Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement, Agility shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Agility and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by Agility of one or more of its rights or remedies shall not be deemed an election, nor bar Agility from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay of Agility to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed.

(d) Power of Attorney. After the occurrence and during the continuance of an Event of Default, Borrower irrevocably appoints Agility (and any of Agility’s designated employees or agents) as Borrower’s true and lawful attorney in fact to: endorse Borrower’s name on any checks or other forms of payment ; make, settle and adjust all claims under and decisions with respect to Borrower’s policies of insurance; settle and adjust disputes and claims respecting accounts, general intangibles and other Collateral; execute and deliver all notices, instruments and agreements in connection with the perfection of the security interest granted in this Agreement; sell, lease or

otherwise dispose of all or any part of the Collateral; and take any other action or sign any other documents required to be taken or signed by Borrower, or reasonably necessary to enforce Agility’s rights or remedies or otherwise carry out the purposes of this Agreement and the other Transaction Documents. The appointment of Agility as Borrower’s attorney in fact, and each of Agility’s rights and powers, being coupled with an interest, are irrevocable until all Obligations owing to Agility have been paid and performed in full.

7. Waivers . The failure of Agility at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other Transaction Document between Borrower and Agility shall not waive or diminish any right of Agility later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other agreement shall be deemed to have been waived except by a specific written waiver signed by an authorized officer of Agility. Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, general intangible, document or guaranty at any time held by Agility on which Borrower is or may in any way be liable, and notice of any action taken by Agility, unless expressly required by this Agreement.

8. Indemnity . Borrower shall indemnify Agility for all out-of-pocket costs or liabilities, including reasonable attorneys’ fees, incurred by Agility in connection with this Agreement or any other Transaction Document.

9. Confidentiality . In handling any confidential non-public information provided to Agility by Borrower, Agility agrees not to disclose such information to any other person, and Agility shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of the same, except that disclosure of such information may be made (i) to subsidiaries or affiliates of Agility in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Obligations, provided that they have entered into a comparable confidentiality agreement with respect thereto, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Agility, and (v) as Agility may deem appropriate in connection with the exercise of any remedies hereunder. Confidential information shall not include information that either: (a) is in the public domain, or becomes part of the public domain, after disclosure to Agility through no fault of Agility; or (b) is disclosed to Agility by a third party, provided Agility does not have knowledge , after reasonable inquiry, that such third party is prohibited from disclosing such information.

10. Governing Law; Jurisdiction; Venue . The Transaction Documents, all acts and transactions under the Transaction Documents, and all rights and obligations of Agility and Borrower shall be governed by the internal laws (and not the conflict of laws rule) of the State of California. As a material part of the consideration to Agility to enter into this Agreement, each of Borrower and Lender (i) agrees that all actions and proceedings relating directly or indirectly to the Transaction Documents shall be litigated in courts located within California, and the venue therefor shall be Santa Barbara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and

(iii) waives any and all rights to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.

11. MUTUAL WAIVER OF JURY TRIAL. BORROWER AND AGILITY EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN AGILITY AND BORROWER INCLUDING ALL OTHER TRANSACTION DOCUMENTS, OR ANY CONDUCT, ACTS OR OMISSIONS OF AGILITY OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH AGILITY OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. IF THIS JURY WAIYER IS FOR ANY REASON UNENFORCEABLE, THE PARTIES AGREE TO RESOLVE ALL CLAIMS, CAUSES AND DISPUTES THROUGH JUDICIAL REFERENCE PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 638 ET SEQ BEFORE A MUTUALLY ACCEPT ABLE REFEREE SITTING WITHOUT A JURY OR, IF NO AGREEMENT ON THE REFEREE IS REACHED, BEFORE A REFEREE SELECTED BY THE PRESIDING JUDGE OF THE CALIFORNIA SUPERIOR COURT FOR

SANTA BARBARA COUNTY. THIS PROVISION SHALL NOTRESTRICT A PARTY FROM EXERCISING NONJUDICIAL REMEDIES UNDER THE CODE.

12. Representations of Lender. Lender represents and warrants, as of the date hereof and as of any exercise of the Warrant, that: (i) it is acquiring the Warrant and any Shares (as defined therein) upon the exercise thereof solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws, and (ii) Lender is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act of 1933, as amended. The representations and warranties contained in this Section 12 shall survive the termination of this Agreement and the repayment of the Obligations until the Warrant has been fully exercised or has fully expired.

13. General. This Agreement and the other Transaction Documents are the final, entire and complete agreement between Borrower and Agility and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement and the other Transaction Documents. There are no oral understanding s, representations or agreements between the parties which are not set forth in the Transaction Documents. The terms and provisions of this Agreement or any other Transaction Document may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Agility. Agility may assign all or any part of its interest in this Agreement or any other Transaction Document and the Obligations to any person or entity, or grant a participation in, or security interest in, any interest in this or any other Transaction Document, without notice to or consent of Borrower. Borrower may not assign any rights under or interest in this Agreement or any other Transaction Document without Agility’s prior written consent.

13. Publicity. At any time after Borrower’s next filing with the Securities and Exchange Commission in which this Agreement is disclosed, Agility may use Borrower’s tradenames and logos in Agility’s marketing materials in respect of the transactions evidenced by this Agreement.

14. Lender’s License. This loan is made pursuant to the California Finance Lenders Law, Division 9 (commencing with Section 22000) of the Financial Code. Agility Capital II, LLC, 812 Anacapa Street, Suite A, Santa Barbara, CA 93101, License Number 603 H822. FOR INFORMATION CONTACT THE DEPARTMENT OF CORPORATIONS, STATE OF CALIFORNIA.

AGILITY CAPITAL II, LLC			EMMAUS LIFE SCIENCES, INC.


By:			By:

Title:			Title:


Address for notices:			Address for notices:

Agility Capital II, LLC			Emmaus Life Sciences, Inc.
812 Anacapa Street, Suite A			20725 S. Western Avenue, Suite 136
Santa Barbara, CA 93101			Torrance, California 90501
Attn:			Attn:
Fax:			Fax:

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT

(a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), commercial tort claims, deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including copyrights, patents, trademarks, goodwill and all intellectual property, payment intangibles and software), goods (including fixtures), instrument s (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and

EXHIBIT B

Places of Business and Locations of Collateral (Section 3(b) ):

Headquarters - 21250 Hawthorne Boulevard, Suite 800, Torrance, California 90503

3870 Del Amo Blvd., Suite 506, Torrance, California 90503

Magellean Storage at 4320 W. 190th Street, Torrance, California 90504

In addition, EM Japan leases 1,322 total square feet of office space in Tokyo, Japan and 1,313 square feet of office space in Osaka, Japan.

Permitted Liens (Section 3(c))

Financial Statements (Section 3(d))

Information (Section 3(f))

See Section 3(d) above.

Litigation (Section 3(g)):

None

Subsidiaries and partnerships and joint ventures (Section 3(h)) :

Subsidiaries: Emmaus Medical, Inc., Newfield Nutrition Corporation, Emmaus Medical Japan, Inc. and Emmaus Medical Europe Ltd. The Borrower is also in the process of forming or otherwise acquiring a subsidiary in Korea, and the formation or acquisition of said subsidiary shall not be a violation of this representation or a default under the Loan Agreement. Joint ventures: On December 28, 2015, the Borrower entered into a collaboration agreement with Korea Bio Medical Science Institute (“ KBMSI ”) pursuant to which, among other things, the Borrower agreed to form a joint steering committee to assess potential joint research, development and commercialization opportunities and to potentially jointly develop intellectual property pursuant to further written agreements to be determined. In addition, the collaboration agreement provides that Borrower and KBMSI will enter into a stock swap agreement pursuant to which the Borrower would exchange Four Billion Korean Won of Borrower’s common stock for Four Billion Korean Won of KBMSI stock.

Year Issued	Interest Rate Range	Term of Notes	Conversion Price	Principal Outstanding December 31, 2015		Discount Amount December 31, 2015		Carrying Amount December 31 2015

Convertible notes payable
2010	6%	5 years	$3.05	$	2,000	$	—	$	2,000
2011	10%	5 years	$3.05	500,000		—		500,000
2013	10%	2 years	$3.60	525,257		—		525,257
2014	10%	Due on demand ~ 2 years	$3.05 ~ $7.00	4,378,563		353,700		4,024,863
2015	10%	Due on demand ~ 2 years	$3.50 ~ $7.00	5,681,166		526,066		5,155,100
				$	11,086,986	$	879,766	$	10,207,220
		Current		$	6,358,698	$	358,351	$	6,000,347
		Long-term		$	4,728,288	$	521,415	$	4,206,873

Convertible notes payable
2012	10%	Due on demand	$3.30	$	298,000	$	—	$	298,000
2014	10%	2 years	$7.00	—		—		—
2015	10%	2 years	$4.50	320,000		—		320,000
				$	618,000	$	—	$	618,000
		Current		$	298,000	$	—	$	298,000
		Long-term		$	320,000	$	—	$	320,000

Notes payable
2013	10%	Due on demand	—	$	830,000	$	—	$	830,000
2014	11%	Due on demand ~ 2 years	—	1,446,950		—		1,446,950
2015	11%	Due on demand ~ 2 years	—	2,379,799		—		2,379,799
				$	4,656,749	—		$	4,656,749
		Current		$	4,656,749	$	—	$	4,656,749
		Long-term		$	—	$	—	$	—

Convertible notes payable—related party
2012	8% ~ 10%	Due on demand	—	$	626,730	$	—	$	626,730
2013	8%	Due on demand	—	50,000		—		50,000
2014	11%	Due on demand ~ 2 years	—	240,308		—		240,308
2015	10% ~ 11%	Due on demand ~ 2 years	—	1,849,266		—		1,849,266
				$	2,766,304	$	—	$	2,766,304
		Current		$	2,766,304	$	—	$	2,766,304
		Long-term		$	—	$	—	$	—
		Grand Total		$	19,128,039	$	879,766	$	18,248,273

Subsequent to the year ended December 31, 2015, the Company issued the following:

			Annual
	Principal		Interest		Conversion
Notes issued after December 31, 2015	Amounts		Rate	Term of Notes	Price

Convertible notes (1)	$	489,950	10%	2 Years	$	4.50
Promissory note-related party	700,000		10%-11%	Due on Demand
Total	$	1,189,950

Investments of Borrower (Section 4(c)(v)):

Borrower owns 39,250 shares of CellSeed, Inc.

Accounts (Section 3(i))

ELSI & EMI:

ELSI - Union Bank - MM 0214

ELSI - Union Bank - Chk 7150

Union Bank MM - 9562

Union Bank Priority Chk 1200

Checking at CommerceWest Bank 0025

Short-Term Investments: Merrill Lynch MM 7742

NNC :

CommerceWest CHK 0017

Checking at Union Bank 7659

CORPORATE RESOLUTIONS AND INCUMBENCY CERTIFICATE

Borrower: EMMAUS LIFE SCIENCES, INC.

I FURTHER CERTIFY that attached hereto as Attachments l and 2 are true and complete copies of the Certificate of Incorporation and Bylaws of the Corporation, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that by unanimous consent of the Directors of the Company (or by other duly authorized corporate action in lieu of a meeting), the following resolutions were adopted.

“BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Company (the “Authorized Officers”), whose actual signatures are shown below:

Names	Position	Actual Signatures

acting for and on behalf of this Company and as its act and deed be, and they hereby are, authorized and empowered:

Borrow Money . To borrow from time to time from Agility, on the terms set forth in that Loan Agreement between the Company and Agility containing the terms set forth in the Term Sheet (the “Loan Agreement “), with such changes therein as may be approved by any Authorized Officer, his or her execution thereof to represent the conclusive approval and authorization of this Board, such sum or sums of money as in their judgment should be borrowed pursuant to the Loan Agreement.

Execute Agreement . To execute and deliver to Agility the Loan Agreement, and any other agreement, document or instrument entered into in connection with the Agreement, and also one or more renewals, extensions, modifications , refinancings , consolidations, or substitutions for one or more of the loans, or any portion of the loans.

Grant Security . To grant a security interest to Agility in the Collateral described in the Loan Agreement, which security interest shall secure all of the Company’s obligations, as described in the Loan Agreement.

Issue Warrants . To issue one or more warrants to purchase the capital stock of the Company to Agility.

Further Acts . To designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Agility may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Agility. Any such notice shall not affect any of the Corporation’s agreements or commitments in effect at the time notice is given.

IFURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand as of May 13, 2016 and attest that the signatures set opposite the names listed above are their genuine signatures.

CERTIFIED AND ATTESTED BY:


By
Name:
Title:

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Yutaka Niihara, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emmaus Life Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 19, 2016

/s/ Yutaka Niihara
Yutaka Niihara, M.D., MPH
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Steve Lee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emmaus Life Sciences, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 19, 2016

/s/ Steve Lee
Steve Lee
Interim Chief Financial Officer
(Principal Financial Officer)

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Emmaus Life Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Yutaka Niihara
Yutaka Niihara, M.D., MPH
Chief Executive Officer
(Principal Executive Officer)
August 19, 2016


/s/ Steve Lee
Steve Lee
Interim Chief Financial Officer
(Principal Financial and Accounting Officer)
August 19, 2016